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Bank 
Catechism 


Items  of  GenetjSil  Interest 
Relating  to   Banking 

By    WILLIAM    POST 


Ne  V  York 
AMERICAN  INSTITUTE  OF  BANK  CLERKS 


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Charts  of  Bank  Organization  and  Administration* 

THE  DAILY  WORK  OF  REPRESENTATIVE  BANKS  CLEARLY  SHOWN  IN  CHART  FORM. 

Different  departments  are  indexed  in  such  a  manner  that  the  course  of  any 
item  may  be  followed  from  its  receipt  to  final  disposition.  The  divisions 
of  the  work  and  responsibility  of  the  employees  are  graphically  set  forth. 
Price,  fifty  cents;  postpaid  to  any  address. 

The  Negotiable  Instruments*  Law* 

Pocket  edition,  fifty-two  pages,  flexible  cover,  containing  the  provisions  of 
the  law  as  enacted  in  twenty-one  States,  one  Territory  and  the  District  of 
Columbia.  Arranged  by  Thomas  B.  Paton,  of  the  New  York  Bar.  Price, 
fifty  cents;  postpaid  to  any  address. 

Irregular  Cheds* 

A  series  of  checks,  irregular  as  to  face  or  indorsement,  arranged  by  the 
Seaboard  National  Bank  and  used  in  the  examinations  conducted  by  that 
institution.  Involving  questions  of  judgment  as  well  as  law  and  fact,  illus- 
trated in  facsimile,  with  explanation  of  the  irregtilarities  and  proper  treat- 
ment approved  by  the  Seaboard  National  Bank.  Price,  fifty  cents;  postpaid 
to  any  address. 

Bank  Catechism* 

THINGS  WHICH   EVERY  BANKER  OUGHT  TO  KNOW  ARRANGED  IN 
THE  FORM  OP  QUESTIONS  AND  ANSWERS. 

Forty  pages,  7x10,  substantial  binding— Regulations  of  National  Banks- 
Coin  and  currency— Problems  in  bank  arithmetic— Letters  of  credit— Ac- 
counts of  strangers— How  to  figure  profits  or  losses  on  accounts— Washing 
stocks— Studies  in  credits— Bank  employees.  By  William  Post.  Price,  fifty 
cents;  postpaid  to  any  address. 

Business  Organization  and  Administration, 

An  address  to  the  classes  in  Theoretical  and  Practical  Accounting,  School 
of  Commerce  Accounts  and  Finance,  New  York  University.  Describing 
and  discussing  the  various  essentials  of  successful  business  conduct,  the 
opportunities  for  young  men,  management,  methods,  responsibilities,  etc. 
By  A.  O.  Kittredge,  C.  P.  A.    Price,  fifty  cents;  postpaid  to  any  address. 

AMERICAN  INSTITUTE  OF  BANK  CLERKS, 

Twenty-five  Pine  Street,  New  York* 


Bank 
Cateclilsin 


Items  of  General  Interest 
Relating  to   Banking 

By    WILLIAM    POST 


SPRECKELS 


Account  Audit  Co.,  New  York. 


SPKtCl^tLO 


BANK  CATECHISM, 

Items  of  General  Interest  Relating  to  Banking* 
By  WILLIAM  POST* 

In  the  sdbjects  here  treated  it  has  not  been  the  aim  of  the  author 
to  cover  the  entire  field  of  banking,  but  rather  to  present,  in  a  manner 
to  be  easily  understood  and  remembered,  such  questions  as  experience, 
research  and  consultation  with  experienced  and  kindly  disposed  offi- 
cials have  evolved.  Many  of  the  topics  are  elementary  in  character  and 
intended  more  particularly  for  junior  clerks,  but  a  perusal  of  them  may 
not  be  without  benefit,  in  the  way  of  a  general  review,  to  bankers  of  age 
and  experience. 

What  is  the  Capital,  the  Surplus  and  the  Undivided  Profits,  and  the 
Working  Capital  of  a  Bank? 

Answer — The  Capital  is  the  amount  paid  in  by  the  shareholders  and 
fixed  in  its  articles  of  association  as  Capital ;  the  Surplus  and  Undivided 
Profits  represent,  generally  speaking,  the  accumulated  net  earnings  of 
a  bank  over  and  above  the  dividends  paid ;  and  the  Working  Capital  is 
represented  by  the  sum  of  the  Capital  and  Surplus  and  Undivided 
Profits.  The  rate  earned  per  annum  upon  the  Working  Capital  is  a 
test  of  what  the  bank  is  doing  for  its  shareholders.  Of  late  it  is  some- 
what in  vogue  in  organizing  new  banks  to  ask  the  shareholders  to  pay 
in  an  additional  amount  over  and  above  capital,  which  amount  is  lodged 
in  a  Surplus  Fund. 


t         What  capital  is  a  National  Bank  required  to  have  under  existing 
statutes? 

Ans. — Twenty-five  thousand  dollars  in  towns  not  exceeding  3,000 
population ;  $50,000  in  towns  not  exceeding  6,000  population ;  $100,000 
in  towns  not  exceeding  50,000  population,  and  in  towns  of  upward  of 
50,000  population  no  organization  may  be  chartered  with  less  than 
$200,000. 


What  amount  of  circulation  may  be  issued  to  a  bank? 
Ans. — An  amount  equal  to  paid-in  capital. 


How  is  the  circulation  issued  to  National  banks  made  secure? 
Ans. — By  a  deposit  of  United  States  bonds  equal  to  the  circulating 
notes  issued. 


In  the  event  that  United  States  bonds  held  to  secure  circulation 
shall  decline  below  par,  what  is  required? 


Ans. — The  Comptroller  of  the  Currency  shall  exact  a  deposit  of  ad- 
ditional bonds  or  currency  to  cover  the  depreciation. 


What  tax  is  imposed  upon  the  circulation  of  National  banks  by 
U.  S.  statutes? 

Ans. — One-half  of  i  per  cent  per  annum  upon  the  average  out- 
standing circulation  if  the  bonds  deposited  to  secure  this  circulation  are 
2  per  cent  bonds — where  the  security  is  in  bonds  of  higher  rate  than  2 
per  cent,  the  tax  is  i  per  cent  per  annum.  The  2  per  cent  bonds,  which 
in  large  measure  represent  the  security  back  of  National  bank  circula- 
tion, are  thirty-year  bonds,  and  at  maturity,  in  the  event  the  Govern- 
ment desires  to  retire  the  loan,  the  last  numbers  issued  will  be  the  first 
called  for  redemption. 


What  provision  is  made  for  worn-out  or  mutilated  National  bank- 
notes? 

Ans. — The  Redemption  Bureau  of  the  United  States  Treasury  De- 
partment redeems  all  National  bank  currency;  notes  redeemed  and  fit 
for  circulation  are  expressed  back  to  the  bank  of  issue;  notes  unfit  for 
use  are  destroyed  under  the  eye  of  an  agent  for  the  bank,  located  in 
Washington,  new  currency  being  printed  in  lieu  and  forwarded  to  the 
bank  for  re-issue.  To  cover  these  redemption  payments  made  by  the 
Treasury  Department,  all  banks  are  required  to  maintain  a  balance  with 
the  United  States  Treasurer  equal  to  5  per  cent  of  outstanding  circula- 
tion, and  this  is  styled  the  Five  Per  cent  Redemption  Fund.  The  banks 
are  required  to  pay  a  proportion  of  the  expenses  incurred  by  the  Re- 
demption Bureau,  such  as  express  charges,  clerk  hire;  etc.  The  agent 
at  Washington  is  also  paid  an  annual  fee  for  certification  to  the  work  of 
destruction  of  mutilated  notes. 


Under  what  direction  are  circulating  notes  for  National  banks  en- 
graved and  printed? 

Ans. — By  the  Comptroller  of  the  Currency,  under  the  direction  of 
the  Secretary  of  the  Treasury. 


What  is  the  aggregate  of  circulation  of  the  banks  in  National  Sys- 
tem at  this  time? 

Ans. — About  $335,000,000. 


What  penalty  is  imposed  by  United  States  statutes  for  counterfeit- 
ing or  passing  counterfeit  money? 

Ans. — A  term  not  exceeding  fifteen  years'  imprisonment  for  each 
offense. 


How  will  the  United  States  Government  profit  by  unredeemed  and 
unpresented  United  States  bonds.  Treasury  notes  and  National  bank 
notes? 

Ans. — By  the  destruction  of  all  classes  of  the  above  through  fire, 
upon  the  sea,  or  by  worn-out  or  rat-eaten  notes. 


In  the  event  a  bank  shall  fail  and  the  receiver  desires  to  dispose  of 
the  United  States  bonds  on  deposit  with  the  Comptroller  of  the  Currency 
to  secure  outstanding  circulation,  in  order  that  the  equity  therein  may 
be  obtained  for  the  creditors,  what  is  necessary? 

Ans. — That  gold  coin  or  legal  tender  notes  shall  be  deposited  in 
amount  equal  to  outstanding  circulation. 


How  many  National  banks  have  gone  into  the  hands  of  a  receiver 
since  the  organization  of  the  system,  and  what  has  become  of  the  out- 
standing circulation  of  these  banks? 

Ans. — Three  hundred  and  ninety-three  (393),  and  these  institutions 
had  issued  and  had  outstanding  at  the  time  of  collapse  a  circulation  on 
their  account  of  $22,000,000,  and  yet  every  note  presented  has  been  re- 
deemed, owing  to  the  security  back  of  the  notes. 


^        In  what  manner  are  United  States  deposits  in  National  banks 
secured? 

Ans. — By  a  deposit  of  United  States  bonds  with  the  Treasury  De- 
partment at  Washington. 

How  many  shares  must  a  shareholder  in  a  National  bank  own  in 
order  to  be  eligible  as  a  director? 

Ans. — Not  less  than  ten ;  and  these,  he  is  required  to  acknowledge 
under  oath,  are  unpledged  for  money  borrowed,  when  quahfying  as  a 
director. 


From  what  source  does  a  National  bank  derive  its  charter? 
Ans. — From  Congress,  through  power  lodged  in  the  Comptroller  of 
the  Currency. 


For  what  amount  are  National  bank  shareholders  liable  in  addition 
to  the  par  value  of  their  stock  in  the  event  of  bank  failure? 

Ans. — For  an  assessment  of  100  per  cent  upon  their  holdings,  but 
not  one  for  another,  with  the  exception  that  shareholders  in  State 
banks,  having  a  capital  of  $5,000,000  and  a  surplus  of  $1,000,000  in  ex- 
istence at  the  time  of  the  enactment  of  the  National  Banking  act,  June 
3,  1864,  and  entering  the  National  System  at  that  time,  are  liable  only 
for  the  amount  paid  in. 


What  is  the  minimum  amount  of  United  States  bonds  a  National 
bank  may  own? 

Ans. — If  the  capital  is  in  excess  of  $150,000,  the  amount  required 
is  $50,000,  and  for  a  less  capital  an  amount  equal  to  one-fourth  the  capi- 
tal ;  but  a  National  bank  cannot  be  organized  with  a  less  capital  than 
$25,000. 


How  many  directors  may  a  National  bank  elect  to  constitute  the 
board? 


Ans. — Not  less  than  five,  and  if  a  larger  number,  to  be  determined 
by  the  Articles  of  Association. 

How  may  vacancies  in  the  Board  of  Directors  of  a  National  bank, 
occurring  between  annual  elections,  be  filled? 
Ans. — By  the  Board  of  Directors. 


How  many  votes  may  a  shareholder  in  a  National  bank  cast  at  an 
election  for  directors? 

Ans. — One  for  each  share  of  stock  held,  but  cumulative  voting  is 
not  permitted. 


May  an  officer  or  an  employee  of  a  National  bank  act  as  proxy  at 
an  election  for  directors  of  the  bank? 

Ans. — It  is  prohibited  by  the  National  Banking  act. 


What  is  meant  by  voting  by  proxy? 

Ans. — When  a  shareholder  delegates  to  another  written  authority 
to  vote  for  him  at  a  regular  or  special  election. 


Can  a  National  bank  continue  to  pay  dividends  when,  by  doing  so, 
its  Surplus  Fund  is  encroached  upon? 

Ans. — It  is  contrary  to  the  National  Banking  act. 


Are  National  banks  permitted  to  buy  or  invest  in  their  own  stock, 
or  to  accept  the  same  as  security  for  loans? 
Ans. — It  is  not  permitted. 


Under  what  conditions  may  National  banks  own  real  estate? 

Ans. — First — Such  as  shall  be  necessary  for  its  immediate  accom- 
modation in  the  transaction  of  its  business. 

Second — Such  as  may  be  mortgaged  to  it  in  good  faith  by  way  of 
security  for  debts  previously  contracted. 

Third — Such  as  shall  be  conveyed  to  it  in  satisfaction  of  debts  pre- 
viously contracted  in  the  course  of  its  dealings. 

Fourth — Such  as  it  shall  purchase  at  sales  under  judgments,  de- 
crees or  mortgages  held  by  the  association,  or  shall  purchase  to  secure 
debts  due  to  it. 

But  real  estate  purchased  to  secure  debts  cannot  be  held  for  a 
longer  period  than  five  years. 


What  is  necessary  incident  to  making  a  transfer  of  the  bank's 
stock? 

Ans. — Identification  of  the  one  making  the  transfer;  if  presented 
with  power  of  attorney  attached  and  by  broker,  the  signature  should 
be  guaranteed  by  the  broker — be  certain  of  signature  before  transfer- 
ring; if  transferred  by  executors,  a  short  certificate  should  be  filed,  and 
it  is  at  times  important  to  see  a  copy  of  the  will ;  if  stock  is  in  the  name 
of  a  corporation,  a  copy  of  a  resolution  of  the  Board  of  Directors  au- 

6 


thorizing  the  sale  of  the  stock,  certified  to  by  the  president  and  secretary 
of  the  board  with  seal  affixed,  should  accompany  power  of  attorney. 
Stock  standing  in  name  of  unmarried  woman,  after  marriage,  should  be 
transferred,  and  the  transfer  signed,  say,  Ludy  Evans  Smith,  formerly 
Lucy  Evans. 

What  risk  is  incurred  by  a  shareholder  in  disposing  of  stock  in  all 
assessable  company  by  power  of  attorney? 

Ans. — If  the  stock  shall  float  around  with  power  attached  and 
transfer  is  not  made  upon  the  books  of  the  company,  and  an  assessment 
is  called,  the  company  will  look  to  the  one  in  whose  name  the  stock 
stands  registered  to  pay  the  amount.  To  avoid  an  entanglement  of 
this  character,  it  is  always  advisable,  in  selling  an  assessable  stock,  to 
make  the  transfer  upon  the  books  of  the  company. 


How  soon  may  a  newly  organized  National  bank  declare  divi- 
dends? 

Ans. — At  the  end  of  the  first  half  year,  but  one-tenth  of  net  profits 
must  be  carried  to  Surplus  Fund  until  that  fund  reaches  a  sum  equal  to 
20  per  cent  of  the  capital  stock. 

What  cities  are  Central  Reserve  Cities? 
Ans. — New  York,  Chicago  and  St.  Louis  (3). 


r^      What  cities  are  Reserve  Cities? 

Ans. — Boston,  Albany,  Brooklyn,  Philadelphia,  Pittsburg,  Balti- 
more, Washington,  Savannah,  New  Orleans,  Louisville,  Houston,  Cin- 
cinnati, Cleveland,  Columbus,  Indianapolis,  Detroit,  Milwaukee,  Des 
Moines,  St.  Paul,  Minneapolis,  Kansas  City,  St.  Joseph,  Lincoln, 
Omaha,  Denver,  San  Francisco  and  Portland — {2^). 


How  many  reports  may  the  Comptroller  of  the  Currency  call  for 
during  the  year?    . 

Ans. — Not  less  than  five.  Reports  of  earnings  must  also  be  made 
within  ten  days  after  dividends  shall  have  been  declared. 


In  what  particular  manner  may  the  five  annual  statements  made  to 
the  Comptroller  of  the  Currency,  which  serve  as  a  guide  to  the  public  in 
estimating  the  condition  of  a  National  bank,  be  amended  to  advantage? 

Ans. — By  requirement  that  where  the  real  estate  of  a  bank  is  mort- 
gaged, the  amount  of  the  incumbrance  or  ground  rent  shall  be  given  in 
these  statements  rather  than  supposed  "equities"  in  real  estate.  The 
banking  public  has  been  deceived  in  some  instances,  thinking  that  real 
estate  was  being  carried  as  a  valuable  asset,  when,  in  fact,  it  has  been 
mortgaged  close  to  the  market  value. 


What  is  the  Standard  Unit  of  value  as  approved  by  the  Act  of  Con- 
gress of  March  14,  1900? 

Ans. — "The  dollar,  consisting  of  twenty-five  and  eight-tenths  grains 


of  gold  nine-tenths  fine — and  all  forms  of  money  issued  or  coined  by 
the  United  States  shall  be  maintained  at  a  parity  of  value  with  the 
standard,  and  it  shall  be  the  duty  of  the  Secretary  of  the  Treasury  to 
maintain  such  parity." 


Of  what  amount  of  pure  gold  and  silver  are  United  States  coins 
minted? 

Ans. — Gold  and  silver  coins  are  both  nine-tenths  pure  metal  and 
one-tenth  copper. 


How  should  transfer  or  payment  of  fu»ds  by  wire  be  made? 

Ans. — In  cipher,  if  possible,  and  care  exercised  in  translating;  the 
transaction  is  at  all  times  a  delicate  one.  Telegrams  in  cipher  with  the 
many  peculiar  words  and  terms  incident  thereto  should  be  typewritten. 
If  cipher  cannot  be  had  for  use  in  making  the  transfer,  the  risk  is  greater 
and  will  require  proportionate  care. 

'  What  is  the  distinction  between  Central  Reserve  City  Banks  and 
Reserve  City  Banks? 

Ans. — Central  Reserve  City  Banks  are  required  to  keep  the  full  25 
per  cent  reserve  in  their  vaults,  and  in  compensation  for  this  restriction 
they  may  be  made  Reserve  Agents  upon  approval  of  the  Comptroller  of 
the  Currency  for  any  National  banks  located  outside  of  the  three  Central 
Reserve  Cities  (New  York^  Chicago  and  St.  Louis). 

Reserve  City  Banks  may  keep  12J  per  cent  of  their  reserve  with  ap- 
proved Reserve  Agents  in  Central  Reserve  Cities,  and, in  lieu  of  this 
concession  are  restricted  in  acting  as  Reserve  Agents  to  only  such  banks 
as  are  located  outside  of  Central  Reserve  or  Reserve  Cities — this  re- 
striction debars  the  Reserve  City  banks  from  acting  as  Reserve  Agents 
for  banks  in  thirty  of  the  largest  cities  of  the  United  States,  limiting 
their  capacity  as  Reserve  Agents  to  banks  which  are  permitted  to  carry 
but  9  per  cent  of  their  reserve  with  Reserve  Agents. 


What  steps  are  necessary  in  order  that  additional  Central  Reserve 
Cities  may  be  declared  by  the  Comptroller  of  the  Currency? 

Ans. — To  name  a  Central  Reserve  City,  a  three-fourths  vote  of  all 
the  National  banks  within  the  limits  of  the  city  is  required,  and  the 
population  must  not  be  less  than  200,000 ;  for  a  Reserve  City,  a  three- 
fourths  vote  of  all  the  National  banks  within  the  city,  and  the  population 
must  not  be  less  than  50,000. 


By  whom  are  National  Bank  Examiners  appointed? 

Ans. — By  the  Comptroller  of  the  Currency.  They  may  be  assigned 
to  examine  a  bank  at  any  time,  and  may  place  the  officers  or  clerks  under 
oath  in  making  examinations. 


In  what  manner  are  Bank  Examiners  compensated? 
Ans. — By  assessment  upon  the  banks  examined. 

8 


What  are  English  Consols? 

Ans. — Certificates  representing  the  debt  of  England — similar  to  our 
United  States  bonds. 

What  is  the  Capital  and  Deposit  Line  of  the  Bank  of  England? 
Ans. — Capital  is  about  $72,000,000,  and  Deposit  Line  about  $250,- 
000,000. 


What  is  the  par  in  United  States  money  of  a  pound  sterling,  and  if 
you  should  owe  a  sum  to  a  merchant  or  bank  in  London,  how  would  you 
pay  the  debt? 

Ans. — The  par  in  our  money  for  one  pound  sterling  is  $4.8665,  and 
to  settle  your  debt  you  would  buy  a  bill  of  exchange  as  much  under 
^4.90  as  possible,  and  forward  the  same  in  settlement.  If  the  rate  is 
above  $4.90,  it  may  be  advisable  to  ship  the  gold  and  pay  the  freight  of 
one-eighth  of  i  per  cent,  insurance,  one-eighth  of  i  per  cent  and  abrasion 
-from  one-eighth  to  one-fourth  of  i  per  cent  dependent  upon  the  denomi- 
nations of  the  coin.  If  the  debt  is  due  you  from  London  and  your  con- 
tract is  to  draw  for  it,  you  may  sell  your  bill  around  $4.83,  and  if  you 
cannot  realize  that  rate  you  can  send  it  to  your  correspondent  with  in- 
structions to  ship  the  gold,  and  the  freight,  insurance  and  abrasion  will  be 
practically  the  same  as  if  shipped  the  other  way.  When  the  balance  of 
trade  sets  in  heavily  either  way,  and  the  creditor  country  is  unwilling  to 
let  the  balance  stand  at  interest,  then  gold  shipments  must  follow. 


If  coupon  bonds  or  coupons  are  stolen  or  lost  can  payment  be 
stopped? 

Ans. — No ;  the  courts  have  decided  again  and  again  that  an  inno- 
cent holder  of  bonds  or  coupons  to  bearer,  even  although  these  had  been 
stolen,  is  a  bona-fide  holder. 


How  should  an  important  telegram,  whether  in  cipher  or  otherwise, 
be  constructed? 

Ans. — After  the  fashion  you  would  construct  your  will — in  con- 
densed terms  and  open  to  but  one  possible  construction. 


How  should  telephone  messages  covering  the  return  of  items,  the 
payment  of  money,  or  the  holding  of  funds  subject  to  check,  be  treated? 

Ans. — By  a  later  confirmatory  call  from  your  end  or  by  the  ex- 
change of  some  bit  of  information  known  only  to  both  parties  concerned, 
and  which  may  have  passed  in  correspondence.  This  latter  plan,  how- 
ever, should  not  be  regarded  as  an  infallible  test. 


What  is  broker's  commission  for  the  sale  of  stocks  and  bonds  in 
New  York  and  Philadelphia? 

Ans. — In  New  York,  one-eighth  of  i  per  cent  upon  both  stocks  and 
bonds ;  in  Philadelphia,  I2jc.  per  share  upon  stocks  selling  above  $10, 
and  6Jc.  if  selling  below  $10 — except  that  for  stocks  the  par  of  which  is 
$50  per  share,  listed  upon  both  New  York  and  Philadelphia  exchanges. 


the  rate  is  6Jc.  per  share,  and  for  bonds  listed  upon  both  exchanges  the 
rate  is  one-eighth  of  i  per  cent. 


What  is  a  Letter  of  Credit? 

Ans. — An  instrument  for  the  use  of  travelers  upon  which  they  may 
receive  advances  in  almost  any  city  of  the  world.  The  initial  step  is  to 
deposit,  say,  $i,ooo  with  your  banker;  he  then  makes  out  a  Letter  of 
Credit  in  your  name,  and  to  this,  in  his  presence,  your  signature  is 
affixed.  He  may  ask  for  a  number  of  duplicate  signatures  upon  blanks 
to  be  forwarded  to  his  principal  correspondents ;  the  letter  may  also 
contain  a  minute  description  of  the  owner,  and  in  addition  it  will  give  the 
names  of  hundreds  of  bankers  in  cities  all  over  the  world  who  will  make 
advancs  upon  application.  When  in  need  of  funds,  the  letter  is  pre- 
sented to  one  of  these  and  the  amount  desired  is  stated;  you  will  then 
be  requested  to  affix  your  signature  to  a  draft  for  the  amount  named, 
drawn  upon  the  bankers  issuing  the  letter,  or  one  of  their  central  corre- 
spondents. For  example,  if  the  letter  was  issued  in  the  United  States, 
and  you  are  asking  for  an  advance  in  Rome,  the  draft  to  be  signed  will 
likely  be  drawn  upon  the  London  or  Paris  correspondent  of  the  home 
banker.  After  signing  this  draft  the  banker  will  compare  the  signature 
with  the  one  upon  the  letter,  and  if  satisfied  upon  that  point,  will  cash 
your  draft  and  indorse  the  amount  paid  upon  the  letter,  signing  his  name 
opposite  the  advance.  In  this  way  by  footing  up  the  payments  made  on 
account  from  time  to  time,  the  banker  requested  to  cash  drafts  will  know 
at  once  how  much  remains  to  your  credit,  unless  the  letter  should  have 
been  tampered  with.  Forgery  and  fraud  are  possible  in  cashing  drafts 
in  this  way  for  entire  strangers,  but  very  rarely  has  this  occurred.  Of 
course  if  the  letter  presented  purported  to  be  for  many  thousands  of 
dollars,  and  the  banker  had  not  been  previously  advised  of  it  and  the 
stranger  presenting  was  asking  for  an  unduly  large  amount,  the  banker 
would  be  justified  in  establishing  the  genuineness  of  the  letter  and  the 
identity  of  the  one  presenting  before  making  payment. 


What  are  Clearing  House  Certificates,  issued  as  emergency  certifi- 
cates in  time  of  financial  distress  or  panic  by  our  clearing  houses? 

Ans. — Certificates  based  upon  the  re-hypothecation  of  bills  receiv- 
able or  other  securities  approved  by  the  Clearing  House  Committee,  and 
usually  issued  for  75  per  cent  of  face  value  of  the  bills  or  securities  so 
deposited.  These  certificates  bear  interest  at  6  per  cent,  and  were  used 
between  the  banks  in  discharging  balances  at  the  Clearing  House. 
Their  issue  permitted  the  banks  to  save  the  commercial  community  from 
widespread  distress  in  two  financial  crises. 


Shall  the  account  of  a  stranger  be  accepted  without  proper  introduc- 
tion? 

Ans. — Unqualifiedly  no.  Some  of  the  most  cunning  swindles  ever 
perpetrated  have  come  about  in  this  way.  A  few  straight  transactions, 
a  good  account  kept  for  a  month  or  two,  your  confidence  gained  and 
then  you  are  victimized.  Very  few  accounts  which  may  be  offered  without 

10 


introduction  will  prove  valuable,  and  if  the  conditions  surrounding  an 
account  coming  in  this  way  should  all  point  to  its  worth  and  correctness 
it  will  not  do  any  harm  to  put  the  man  off,  until,  by  telegraph,  long-dis- 
tance 'phone  or  correspondence,  you  may  satisfactorily  establish  his 
identity  and  character.  No  one  in  the  business  world  should  be  more 
certain  that  the  credentials  of  his  customer  are  straight  than  the  banker. 

How  may  it  be  determined  whether  an  account  is  of  profit  or  loss  to 
the  bank? 

Ans. — By  taking  the  average  balance  for  a  given  period,  deducting 
the  proportion  unemployed  as  reserve  and  figuring  what  the  balance  will 
earn  for  the  same  period  at  the  average  rate  for  money  during  that  time ; 
deduct  the  annual  percentage  of  the  bank's  gross  profits  required  to 
cover  expenses  (often  upwards  of  33  per  cent)  and  you  have  the  net 
income  to  the  bank  from  this  account.  Then  run  over  the  record  of 
country  checks  and  collections,  figure  the  time  (which  may  be  one  week, 
sometimes  two)  and  the  cost  in  exchange  upon  these  items  for  the  same 
period;  strike  the  difference  between  income  and  outgo  and  see  if  you 
have  a  profit.  For  example,  you  may  have  an  account  where  the  average 
balance  for  the  year  has  been  $1,000;  deduct  from  this  amount  the  25 
per  cent  reserve  required  and  you  have  $750  for  investment.  The  loan 
department  will  tell  you  that  the  average  rate  of  income  from  investments 
has  been,  say,  4f  per  cent  (some  years  much  less),  and  that  this  $750  has, 
therefore,  brought  in  a  return  of  $32.81.  To  this  you  should  add  the  in- 
terest at  2  per  cent  upon  $125,  one-half  of  the  reserve  required,  which  you 
have  been  permitted  to  keep  in  New  York,  or  $2.50,  and  you  have  $35.31 
for  gross  income.  From  this  you  will  need  to  deduct  at  least  33  per  cent, 
the  cost  of  maintaining  all  accounts  (bank  expenses),  and  you  have  a  net 
income  of  $23.54.  That  looks  snug,  does  it  not?.  But  suppose  that  ac- 
count shall  deposit  upon  an  average  three  out-of-town  checks  each  day, 
a  very  modest  average,  one  of  which  will  cost  the  bank  ten  cents  to  col- 
lect, and  with  300  working  days  to  the  year  you  have  $30,  as  represent- 
ing the  loss  in  exchange  and  a  loss  upon  your  account  of  $6.46.  The 
example  just  given  is  one  always  present  to  the  practical  banker — ^we 
are  coming  in  contact  with  accounts  where  the  balance  is  not  large  and 
where  the  volume  of  country  checks  is  excessive  all  the  time.  We  have 
also  known  accounts  where  the  average  balance  was  from  $25,000  to 
$30,000  and  the  profit  wiped  out  by  an  inordinate  amount  of  out-of-town 
checks  and  collections. 


What  is  meant  by  "washing  stocks'*? 

Ans. — Bogus  or  sham  sales  recorded  as  real  sales  for  the  purpose 
of  deceiving  the  public  and  making  a  market  for  unsalable  stock  at 
prices  above  the  actual  value.  The  broker  buying  and  the  broker  sell- 
ing may  be  ignorant  of  the  "wash."  A  bid  may  be  lodged  with  one 
broker  to  buy  at  a  certain  price  and  with  another  to  sell,  and  the  sale  is 
recorded.  This  game  may  be  continued  for  days,  and  even  weeks,  dur- 
ing which  time  the  stock  appears  to  go  higher  and  higher  in  recorded 
sales.    If,  in  this  way,  the  public  shall  become  interested,  then  it  is  often 

II 


a  part  of  the  plan  to  publish  rosy  reports  of  the  company — "deals  are 
on/'  "the  earnings  are  large"  or  "a  corporation  is  under  way"  and  "the 
stock  is  sure  to  advance."  The  object  of  all  this  is  to  induce  the  public 
to  purchase,  and,  if  the  plan  succeeds,  as  sometimes  happens,  the 
schemers  will  unload  and  the  stock  drops  to  its  proper  level.  Again,  the 
"washing  of  stocks"  may  be  for  the  purpose  of  giving  a  fictitious  value 
to  a  security  which  is  being  used  for  collateral  purposes.  If  the  loaning 
bank  is  not  looking  closely  to  the  intrinsic  value  of  its  security  or  is  a 
little  out  of  touch  with  the  market,  it  may  be  deceived  into  taking  these 
apparent  quotations  as  real. 


What  is  a  Bond  of  Indemnity? 

Ans. — ^A  contract  or  agreement  to  indemnify  (i.  e.,  to  refund,  to 
make  good)  in  the  event  that  certain  contingencies  arise.  A  promissory 
note,  certificate  of  stock,  bank  draft,  certified  check  or  other  security 
may  have  been  lost,  a  duplicate  is  wanted,  and  the  one  called  upon  to 
furnish  duplicate  is  unwilling  to  give  a  second  obligation,  not  knowing 
the  fate  of  the  first,  unless  indemnified  against  loss  in  the  event  the  origi- 
nal shall  "turn  up"  in  innocent  hands.  A  bond  of  this  character  may  be 
given  for  other  purposes,  and  to  be  of  value  will  needto  have  responsi- 
bility back  of  it.  An  irresponsible  concern  will  readily  give  it,  but  careful 
people  who  might  be  called  to  make  payment  under  the  bond  will  be 
quite  sure  of  their  position  before  putting  their  name  to  it. 


How  should  inquiries  relating  to  the  financial  strength  and  standing 
of  individuals,  firms  or  corporations  be  treated? 

Ans. — More  important  work  than  this  does  not  come  to  the  banker, 
and  all  requests  from  proper  channels  should  receive  thorough,  con- 
scientious research,  consideration  and  reply.  Skimming  over  the  surface 
and  putting  oflf  a  correspondent  upon  the  plea  that  the  party  inquired 
about  is  not  one  of  your  customers  is  not  modern  banking.  If  direct  and 
positive  information  is  not  at  hand,  it  becomes  us  to  go  after  it,  and, 
when  possible  to  obtain  it,  the  double  purpose  is  served  of  meeting  thei 
want  of  your  correspondent  and  likewise  broadening  your  knowledge  of 
credit  matters.  It  is  to  be  regretted  that  banks  failing  to  recognize  the 
importance  of  treating  inquiries  of  this  kind  from  the  standpoint  of 
reciprocity  and  thoroughness  are  still  in  evidence.  From  our  point  of 
view  this  is  short-sighted.  How  are  we  to  secure  conscientious  consid- 
eration and  reply  from  correspondents  if  we  absorb  all  that  comes  our 
way  and  ofifer  little  in  return?  Care  should  be  exercised,  of  course,  in 
giving  or  asking  credit  information,  but  when  seeking  another's  confi- 
dence he  is  entitled  to  yours.  Credit  men  in  banking  institutions  are 
fast  sizing  up  the  situation  and  know  which  among  banking  opinions  are 
based  upon  analysis  and  careful  research,  and  which  are  worthless. 
Along  these  lines,  if  you  would  receive,  you  must  give. 

What  is  meant  by  "Kiting"? 

Ans. — An  exchange  of  checks  or  notes  by  two  or  more  individuals 
or  concerns  without  an  exchange  of  value  and  for  the  purpose  of  raising 

12 


money.  For  example,  A.  B.  is  short  today,  but  hopes  to  be  in  funds  to- 
morrow; he  goes  to  C.  D.,  who  may  be  one  of  a  class  who  are  proverb- 
ially short,  and  they  exchange  checks.  Each  m^n  deposits  the  other's 
check  in  his  bank,  and  unless  the  bank  at  either  end  has  had  cause  to 
suspect  the  "game'^  and  presents  the  check  for  payment  upon  the  same 
day,  the  *'Kite"  may  work  for  the  time  being.  The  practice,  however,  is 
easily  detected  and  destruction  of  credit  follows.  In  instances  the 
**Kite"  is  a  three-cornered  one,  and  at  other  times  may  take  the  form  of 
an  exchange  of  notes  for  discount  at  both  ends  of  the  line.  The  practice 
is  disreputable. 


What  two  banks  were  first  organized  for  business  in  the  United 
States? 

Ans. — Bank  of  North  America,  Philadelphia,  and  the  Bank  of  New 
York,  National  Banking  Association,  New  York  City. 


Is  it  a  proper  or  far-seeing  course  for  the  junior  men  in  the  bank  to 
prepare  themselves  for  more  advanced  positions  in  the  earlier  years  of 
their  career? 

Ans. — It  certainly  is,  and  the  right  thinking  bank  official  will  not  in 
any  manner  hedge  up  the  way  of  those  who  go  about  it  right. 


How  should  a  properly-timed  suggestion  from  a  discriminating, 
conservative  clerk,  relative  to  that  which  he  may  consider  an  improve- 
ment in  the  work,  be  treated? 

Ans. — With  thoughtful  consideration.  A  large  measure  of  the 
quickest  and  best  methods  which  today  obtain  in  banking  have  come  in 
this  way. 


Is  it  advisable  that  a  fraternal  feeling  be  cultivated  between  the  em- 
ployees of  the  bank? 

Ans. — Unquestionably,  and  much  might  be  gained  by  a  larger 
measure  of  fraternal  intercourse  between  local  bank  men  generally. 


What  is  required  of  an  employee  of  the  bank  before  leaving  upon  a 
vacation? 

Ans. — That  he  shall  confer  with  the  proper  officer  to  the  end  that  a 
suitable  substitute  for  his  desk  may  be  selected,  and,  further,  if  the  situa- 
tion demands  it,  that  he  may  acquaint  this  substitute  with  all  the  details 
which  would  be  to  his  advantage  to  know  or  which  would  prevent  his 
stumbling. 


What  should  be  embraced  within  the  bank's  private  summary? 

Ans. — In  parallel  columns  and  upon  a  single  line  stretching  all  the 
way  across  the  folio  the  condition  of  the  bank,  its  different  interests  and 
the  results  for  each  year  at  a  fixed  date  should  be  recorded.  Here  at  a 
glance,  upon  one  page,  it  may  then  be  noted  how  the  current  year  com- 
pares with  every  other  year  in  all  the  sub-divisions  of  the  work.  The 
initial  labor  incident  to  the  preparation  of  the  bank  data  for  a  summary 

13 


of  this  kind  is  considerable,  and  the  undertaking  should  be  placed  in  the 
hands  of  a  methodical,  painstaking  man.  After  the  deductions  and  totals 
for  the  back  years  have  been  completed,  an  hour's  work  each  year  will 
bring  the  record  down  to  date.  The  columns  to  be  ruled  perpendicu- 
larly, should  carry  the  following  headings,  and  any  others  may  be 
added  that  the  practical  banker  shall  esteem  of  value  : — 

The  Year. 

Capital. 

Surplus  and  Undivided  Profits. 

Percentage  of  Surplus  and  Undivided  Profits  to  Capital. 

Circulation. 

Deposits. 

Loans. 

Stocks  and  Other  Securities. 

United  States  Bonds. 

Dividends  Paid. 

Earnings  Above  Dividends. 

Total  Net  Earnings. 

Expenses,  Taxes  and  Exchange.    (In  separate  columns  if  preferred.) 

Doubtful  Debts  Charged  Oflf. 

Doubtful  Debts  Collected. 

Total  Gross  Earnings. 

Percentage  Earned  Upon  Capital. 

Average  Yearly  Percentage  Earned  Upon  Capital. 

Percentage  Earned  Upon  Working  Capital.  (Capital  and  Surplus 
and  Undivided  Profits.) 

Average  Yearly  Percentage  Earned  Upon  Working  Capital. 

Rate  of  Dividend  for  the  Year. 

Percentage  of  Gross  Earnings  Required  to  Meet  Expenses. 

Percentage  of  Deposits  to  Capital. 

Market  Price  of  Stock. 

Book  Value  of  Stock. 

Number  of  Shareholders. 

Number  of  Depositors. 

Rank  in  the  City  Clearing  House  Banks  in  Point  of  Surplus  and 
Undivided  Profits  to  Capital. 

Rank  in  the  City  Clearing  House  Banks  in  Point  of  Deposits  to 
Capital. 

Rank  in  the  City  Clearing  House  Banks  in  Point  of  Earnings  to 
Capital. 

Rank  in  Point  of  Surplus  and  Undivided  Profits  to  Capital  in  United 
States  (Roll  of  Honor). 

Upon  additional  pages  of  this  summary,  in  columns  also  ruled  per- 
pendicularly, but  in  this  table  with  the  years  as  headings  for  the  columns, 
there  should  be  scheduled  under  each  year : — 

Directors  in  the  order  of  their  election. 

Officers. 

Employees  listed  in  the  order  of  their  entry  into  service. 

Name  of  the  Secretary  of  the  Treasury. 

14 


Name  of  the  Controller  of  the  Currency. 

Name  of  the  Bank  Examiner. 

Name  of  the  Notary. 

The  above  table,  after  the  grouping  of  names  has  occurred  for  a 
number  of  years,  will  be  found  a  most  interesting  one.  Take  the  groups 
of  directors  or  employees,  for  instance ;  it  may  be  noted  that  a  director 
or  lad  entering  the  service  of  the  bank,  say,  in  1865,  at  that  time  the 
last  name  on  the  list  has  gradually  mounted  until  he  is  the  first  director 
or  employee  in  point  of  service. 

Again,  here  in  this  summary  should  be  filed  in  loose  tabular  form 
the  condition  of  the  other  Clearing  House  Banks — worked  up  as  far 
back  as  the  data  will  permit,  upon  a  single  page — the  history  of  each 
bank  may  be  revealed  after  this  style  in  twelve  columns : — 


tD 

T? 

^ 

C 

.5 

12 

i2 

a 

S 

1 

^ 

03 

1 

£ 

e-is 

c 

c 

!2 

3(43 

0 

0 

in  0 

a 

►^ 

^' 

u 

D 

^13 

0 
> 

^ 

i 

.1 

*> 

c 

c 
ca 

(A 

'6 

I 

CO 

1 

^1 

to 

CO 

•0 
£ 

W 

1 

C 

5 

c)5 

1 

1 

(U 

rt 

p 

'? 

cfl 

4^ 

4> 

OJ 

Q 

OS 

0) 

>< 

U 

m 

s 

0 

w 

(£ 

Ph 

pti; 

PQ 

:s 

Q 

1865 

|75o,cx)o 

1866 

750,000 

1867 

750,000 

After  these  tables  have  once  been  completed  for  the  back  years,  the 
labor  incident  to  adding  the  data  for  each  new  year  is  small,  and  when 
several  years  have  been  grouped  together  you  have  a  unique  record  of 
what  your  neighbors  have  been  doing  as  compared  with  your  own  effort. 


Is  it  advisable  that  to  some  one  be  delegated  the  keeping  of  an  in- 
dexed Scrap-Book? 

Ans. — Very  valuable  data  may  be  preserved  in  this  way — informa- 
tion which  it  would  be  somewhat  difficult  to  classify  and  lodge  else- 
where. 


What  shall  be  done  with  the  old  bank  records? 

Ans. — The  head  of  each  department  should  be  held  responsible  for 
the  care  of  these  books,  and  at  least  once  a  year  they  should  be  gone 
over  by  one  of  the  official  staff  and  useless  records  sent  to  a  responsible 
pulp  dealer  who  will  personally  supervise  destruction.  All  books  of  or- 
iginal entry  should  be  carefully  preserved. 

15 


What  care  should  be  taken  in  disposing  of  the  waste  paper  of  the 
bank? 

Ans. — The  porter  or  night  watchman  should  be  of  sufficient  intelli- 
gence to  note  the  value  of  any  paper  which  may,  by  accident,  have  gone 
to  the  waste  baskets  or  strayed  to  the  floor.  Each  piece  should  be 
handled  separately  and  intelligently.  Valuable  papers  and  coupons  have 
been  found  in  this  way. 


In  ordering  loose  printed  forms  from  the  stationer  what  is  advisable 
in  order  that  this  be  done  intelHgently? 

Ans. — That  the  date  of  the  order  and  the  number  ordered  should 
be  printed  in  small  type  upon  these  forms  in  this  manner:  2-20-01-12M. 
This  will  serve  as  a  guide  for  future  orders,  determining  quickly  the 
number  needed. 


What  is  needed  to  keep  the  run  of  the  expenses  of  the  bank? 

Ans. — In  order  to  determine  if  a  bill  presented  is  correct  and  is  due, 
a  schedule  of  all  regular  expenses  should  be  made  up,  giving  monthly, 
quarterly,  semi-annually  and  yearly  items,  with  date  of  last  payment. 
This  will  permit  the  proper  officer,  at  a  glance,  to  determine  if  the  item 
is  one  to  be  paid. 


LOAN  AND  DISCOUNT  DEPARTMENT. 
What  is  simple  interest  upon  a  note  for  $1,055,  3^0  days  to  the  year, 
dated  January  i  and  payable  May  12,  at  6  per  cent? 
Ans.— $23.03. 


What  is  the  discount  upon  a  note  for  $5,000,  dated  January  i,  1901, 
due  May  31,  and  discounted  February  6,  at  4^  per  cent,  count  day  of 
discount  and  day  of  maturity  (Pennsylvania  custom)? 

Ans. — $71.88.  Where  notes  fall  due  upon  Saturday,  Sunday  or 
holiday,  charge  discount  to  and  including  day  of  payment,  and  in  figur- 
ing days  look  out  for  leap  year. 


Is  a  note  dated  upon  a  Sunday  or  a  holiday  legal? 

Ans. — Many  consider  it  safer  to  throw  out  all  notes  dated  upon  a 
Sunday,  although  if  it  can  be  shown  that  the  transaction  did  not  occur 
on  a  Sunday,  and  that  the  note  was  inadvertently  dated  back,  the  courts 
have  ruled  in  favor  of  its  admission.  It  is  just  as  well,  however,  to  be 
upon  the  safe  side  and  shut  off  controversy  upon  that  point.  Notes 
dated  upon  a  legal  holiday  are  valid. 


How  should  an  ordinary  promissory  note  be  drawn? 

Ans. — The  form  should  contain  an  unqualified  promise  to  pay, 
either  upon  demand  or  at  a  specified  time,  and  by  custom  in  Pennsyl- 
vania the  terms  **value  received"  and  ''without  defalcation"  have  been 
incorporated.  While  'Value  received"  and  "without  defalcation"  may  not 
be  vital  to  the  instrument,  the  use  of  "value  received"  certainly  rounds  out 

16 


the  note  and  does  not  leave  the  fact  of  an  "exchange  of  value"  to  be 
implied  by  the  bare  promise  to  pay.  In  an  ordinary  promissory  note  the 
insertion  of  any  matter  bearing  upon  the  contract  for  which  the  note  was 
given,  or  any  matter  foreign  to  a  plain  note,  should  be  avoided.  If 
offered  a  note  of  this  character  for  discount,  make  sure  that  its  nego- 
tiabihty  has  not  been  destroyed. 


What  is  a  judgment  note? 

Ans. — A  note  in  which  is  incorporated  a  confession  of  judgment. 
In  Pennsylvania  this  may  be  entered  up  against  property  of  the  maker 
at  any  time  prior  to  or  after  maturity,  but  execution  cannot  be  taken 
until  default  is  made.  In  certain  States  a  judgment  note  is  not  negoti- 
able, but  the  Negotiable  Instruments'  Law  admits  the  note  where  it  con- 
tains a  simple  confession  of  judgment. 


What  is  a  collateral  note? 

Ans. — A  promissory  note  with  a  pledge  of  collateral  scheduled 
therein.  This  form  of  note  differs  somewhat  according  to  the  usages  of 
the  bank  making  the  loan.  It  generally  calls  for  a  margin  of  value  in 
the  collateral  of  20  per  cent  over  and  above  the  face  of  the  loan,  which 
margin  must  be  maintained,  and,  among  other  features,  in  default  pro- 
vides that  the  note  becomes  immediately  due,  and  the  securities  therein 
pledged  may  be  sold  to  pay  the  note. 


What  is  required  in  the  examination  of  collateral? 

Ans. — That  knowledge  shall  be  had  of  the  intrinsic  value,  as  well  as 
market  price,  of  securities.  Surface  quotations  should  not  be  taken 
alone  as  a  guide.  Certificates  of  stock  must  be  dated,  signed,  sealed  and 
duly  attested  by  the  registrar.  Powers  of  attorney  upon  the  back  of 
certificates  or  loose  powers  should  be  carefully  filled  in,  leaving  the 
name  of  the  attorney  and  the  name  of  the  party  to  whom  the  transfer 
shall  be  made,  in  blank.  In  filling  up  these  powers  the  title  of  the  com- 
pany should  be  written  out  in  full,  not  abbreviated,  and  signature  to  the 
power  must  be  made  in  exactly  the  same  manner  as  upon  the  face  of  the 
certificate,  and  should  be  guaranteed,  unless  known  to  the  loaning  bank. 
Bonds  offered  as  collateral  should  be  closely  scanned  to  note  if  regis- 
tered. If  so,  power  of  attorney  must  accompany.  Signature,  date,  seal 
and  next  maturing  coupon  must  all  be  in  place.  In  short,  look  the  bond 
all  over,  front  and  back,  before  it  goes  into  your  fireproof  vault.  The 
man  who  handles  collateral  should  ever  be  upon  the  alert  to  detect 
forged  securities.  No  rule  can  guide  him  here;  we  only  suggest  that 
the  best  of  all  safeguards  is  to  know  with  whom  you  deal.  The  man  who 
cannot  furnish  satisfactory  identification  is  not  entitled  to  do  business 
with  you. 


What  is  an  irrevokable  power  of  attorney? 

Ans. — A  power  given  for  the  pledging  or  sale  of  securities  wherein 
the  name  of  the  party  to  whom  the  stock  may  be  sold  and  the  name  of 
the  attorney  to  make  the  transfer  are  both  usually  in  blank.     It  some- 

17 


times  occurs,  however,  that  for  the  purpose  of  transmission,  or  for  other 
reasons,  the  name  of  the  attorney  will  be  filled  in,  and  in  that  case  the 
person  named  as  attorney  often  gives  what  is  known  as  a  power  of  sub- 
stitution, which  has  the  effect,  if  desired,  of  restoring  the  blank  feature 
as  found  in  the  original  power. 


Where  temporary  stock  or  bond  certificates,  or  certificates  with  in- 
stalments paid  on  account  (of  which  there  are  many  these  days)  are 
offered  as  collateral,  which  is  the  better  power  of  attorney  to  accom- 


pany? 


Ans. — The  power  upon  the  back  of  the  certificate  is  by  all  odds  the 
better  power,  for  it  is  at  times  difficult  to  accurately  describe  the  char- 
acter of  the  security  in  a  separate  power. 


With  securities  constantly  fluctuating  in  price,  how  is  it  possible  for 
this  department  to  know  that  all  loans  are  "sufficiently  margined"? 

Ans. — By  keeping  a  daily  watch  upon  all  classes  of  quotations.  No 
more  important  work  devolves  upon  this  department. 

Are  securities  standing  in  the  name  of  a  ''trustee,"  accompanied  by 
power  of  attorney,  good  collateral? 

Ans. — ^They  are  not,  unless  you  are  satisfactorily  advised  that  the 
deed  of  trust  permits  the  trustee  to  so  use  the  security.  To  be  certain 
upon  this  point  it  is  advisable  to  examine  the  deed.  It  often  happens 
that  the  right  of  a  trustee  to  sell  or  pledge  securities  is  a  limited  right, 
to  be  used  only  under  certain  conditions. 


Are  Bills  Receivable  good  form  of  collateral  for  demand  or  time 
loans? 

Ans. — They  will  need  to  be  taken  with  discrimination  and  handled 
with  care ;  must  not  be  permitted  to  become  over-due  nor  neglected  in 
the  matter  of  sending  notices  to  the  makers.  We  recall  an  instance 
where  long-time  bills  with  high  credit  rating  in  the  reports,  lodged  in 
this  way  as  collateral,  proved  to  be  forged;  they  had  purposely  been 
drawn  at  long-time  in  order  that  notices  would  not  be  sent.  As  a  rule, 
this  form  of  collateral  is  not  the  most  desirable. 


Are  warehouse  receipts  for  merchandise  or  merchandise  desirable 
forms  of  collateral? 

Ans. — Not  always,  only  when  the  warehouse  is  thoroughly  respon- 
sible for  quality,  quantity  and  care  of  the  goods  in  every  particular. 
Warehouse  receipts  which  read,  "Received  so  many  barrels  'said  to 
contain  flour' "  are  not  good  collateral.  Where  the  warehouse  is  re- 
sponsible and  assumes  responsibility,  then  you  are  secure.  Banks  in 
one  of  our  cities  were  victimized  extensively  by  loaning  upon  warehouse 
receipts  covering  cases  labeled  "high  grade  canned  oysters,"  and  these 
turned  out  to  be  cheap  tomatoes.  The  warehouse  should  know  its  cus- 
tomer the  same  as  the  bank  is  expected  to  know  with  whom  it  deals. 


Are  life  insurance  policies  desirable  collateral? 

Ans. — Not  always ;  the  companies  in  instances  after  regular  assign- 
ment of  the  policy  had  been  made  upon  the  books  of  the  company  in 
which  the  widow  and  all  heirs  had  joined,  have  declined  to  turn  over  the 
money  unless  the  widow  and  heirs  further  joined  in  signing  the  receipt 
and  indorsing  the  check.    A  very  jug-handled  proposition. 


In  what  manner  should  exchanges  of  collateral  be  effected? 
Ans. — Only  upon  approval  of  an  officer,  and  upon  a  form  provided 
by  the  bank,  signed  by  the  borrower. 


What  care  is  required  in  holding  collateral  security  for  overdue 
obligations? 

Ans. — That  negligence  shall  not  occur  in  realizing  thereon.  If  so, 
the  holder  is  liable. 


Are  National  banks  permitted  to  loan  upon  their  own  stock? 
Ans. — They  are  not,  but  may  accept  it  temporarily  to  secure  a 
doubtful  debt. 


Are  National  banks  permitted  to  loan  upon  mortgages? 

Ans. — They  are  not ;  but  may  take  a  mortgage  to  secure  a  doubtful 
debt.  The  law,  however,  states  that  this  must  be  disposed  of  inside  of 
five  years. 


Suppose  you  have  a  discounted  bill  overdue  and  protested  on  your 
hands,  and  one  of  the  parties  to  the  contract  shall  promise  payment  at  a 
certain  date  and  you  are  disposed  to  hold  until  that  time  rather  than 
take  a  new  note,  what  is  to  be  done? 

Ans. — Secure  by  all  means  the  assent  of  the  other  parties  to  the 
contract,  or  they  may  be  released  by  the  extension. 


What  is  meant  by  "dead-horse"  in  the  Bills  Receivable  of  a  bank? 

Ans. — Bills  that  are  doubtful  but  which  are  carried  along  and  re- 
newed (interest  sometimes  paid  and  sometimes  not)  until  "reckoning 
day"  comes. 


What  are  termed  excessive  loans  by  the  National  Banking  Act? 

Ans. — Loans  in  excess  of  lo  per  cent  of  the  capital  of  the  bank  to 
one  firm  or  individual  direct — in  this  lo  per  cent,  however,  need  not  be  in- 
cluded regular  trade  paper  discounted.  Large  customers  require  large 
accommodation,  and  banks  have  been  compelled,  where  thoroughly 
secured,  to  disregard  the  limit  at  times.  The  Comptroller  has  called  at- 
tention to  the  custom  repeatedly  in  his  reports  and  has  suggested 
amendments  whereby  a  proportion  of  the  total  assets  of  the  bank  should 
govern  the  limit,  rather  than  its  capital  stock.  That  the  act  requires 
amendment  is  undoubted,  but  there  are  bankers  who  think  the  foregoing 
proposition  has  an  element  of  danger  in  it.  Not  always  to  the  bank 
showing  the  largest  and  quickest  measure  of  expansion  should  be  given 

19 


the  larger  measure  of  latitude  in  loans.  Deposits,  where  strong  induce- 
ments are  offered,  come  quickly  and  sometimes  go  quickly.  Others 
think  the  spirit  of  the  act,  when  first  adopted,  was  in  intent  that  a  bank 
should  be  permitted  to  loan  in  this  way  lo  per  cent  of  its  working  capi- 
tal, which  is  its  original  capital  plus  its  surplus  and  undivided  earnings. 
It  hardly  seems  a  fair  proposition  that  a  bank  with  $500,000  capital  and 
$1,500,000  surplus  shall  come  under  the  same  limit  as  a  new  institution 
with  say  $500,000  only.  The  first-mentioned  bank  has  practically  in- 
creased its  capital  to  four  times  the  original  amount — the  limit,  however^ 
by  a  strict  construction  of  the  act,  remains  immovable.  Congress  in 
recently  taxing  the  capital  and  surplus  of  the  banks  has  recognized  the 
sum  of  these  two  items  as  the  working  capital. 


What  is  meant  by  strictly  business  paper? 

Ans. — Paper  given  for  merchandise,  or  any  form  of  property,  or 
where  a  real  value  has  been  exchanged.  Accommodation  paper  is  the 
opposite  in  character,  and  is  made  for  the  benefit  of  some  one  other  than 
the  one  who  lends  his  name.  Two  concerns  may  exchange  notes,  the 
one  with  the  other,  in  order  that  each  may  raise  money  at  the  bank. 
This  is  a  form  of  ''kiting,"  a  discreditable  practice,  pretty  sure  to  be  de- 
tected in  the  end.  An  individual  may  loan  his  name  upon  a  note  to  help 
a  friend,  if  so,  it  is  a  matter  of  accommodation.  In  Pennsylvania  the 
bank  loaning  upon  accommodation  paper  must  not  have  knowledge  of 
the  fact.  The  Negotiable  Instruments'  Law,  however,  sweeps  away  this 
wrong  interpretation  and  makes  the  man  who  puts  his  name  upon  a 
note,  front  or  back,  responsible. 


What  is  the  Negotiable  Instruments*  Law? 

Ans. — Judge  Brewster  has  defined  it  as  "containing  all  the  funda- 
mental principles  and  essential  definitions  of  the  law  on  commercial 
paper ;  the  law,  in  short,  of  some  ten  thousand  reported  cases  is  in  sub- 
stance condensed  into  thirty-six  pages."  We  advise  the  younger  men  to 
become  as  thoroughly  acquainted  with  the  Negotiable  Instruments'  Law 
as  with  the  multiplication  table. 


In  how  many  States  has  the  Negotiable  Instruments'  Law  been  en- 
acted? 

Ans. — Twenty-one  States,  one  territory  and  the  District  of  Colum- 
bia. 


Under  what  conditions  may  a  note  be  altered  or  changed  after  hav- 
ing been  signed  and  indorsed? 

Ans. — Only  by  the  maker,  and  with  the  consent  of  all  the  indorsers 
thereto,  but  it  is  advisable  to  get  a  new  note.  Don't  run  the  risk  of  go- 
ing to  court  with  an  altered  note. 


Is  it  important  that  special  care  should  be  given  to  the  indorsement 
of  all  paper  discounted  by  the  bank? 

Ans. — Every  note  offered  for  discount  should  be  read  minutely 


20 


from  beginning  to  end,  front  and  back,  andTif  there  are  a  number  of 
indorsers  and  you  are  discounting  for  one  of  these,  see  to  it  that  he  is 
the  last  indorser,  even  though  it  may  be  necessary  for  him  to  indorse 
twice. 


If  a  fictitious  name  is  signed  to  or  indorsed  upon  a  note  and  it  is 
ofifered  as  a  negotiable  note,  is  it  forgery? 
Ans. — It  is. 


What  should  accompany  each  purchase  of  commercial  paper  from 
note  brokers? 

Ans. — A  bill  of  sale,  which  should  be  filed  with  the  paper.  If  several 
notes  are  covered  by  the  bill,  file  with  the  note  of  last  maturity. 


If  paper  purchased  from  note  broker  shall  prove  to  be  forged,  who 
is  responsible? 

Ans. — The  broker. 


In  the  event  that  the  bank  shall  desire  to  call  in  demand  money 
from  brokers,  or  if  the  broker  shall  purpose  returning  demand  money, 
what  is  customary? 

Ans. — In  Philadelphia  it  is  a  matter  of  established  courtesy  to  notify 
in  either  case  not  later  than  ten  o'clock  in  the  morning. 


How  can  the  Credit  Department  keep  up  to  date  as  to  all  the  names 
upon  the  market? 

Ans. — By  keeping  in  touch  with  all  the  sources  where  confidential 
information  may  be  had.    These  are  of  a  variety. 


How  would  you  analyze  a  statement  with  a  view  to  extending 
credit? 

Ans. — The  cash,  merchandise,  open  accounts  and  bills  receivable, 
termed  ''quick  assets,"  should  be  largely  in  excess  of  accounts  and  bills 
payable.  Real  estate  and  machinery  should  be  taken  at  conservative 
figures,  and  if  the  former  item  is  mortgaged  and  no  mention  is  made  of 
the  mortgage,  you  will  do  well  to  ascertain  the  market  value  of  the  prop- 
erty over  and  above  incumbrance.  Look  to  it  that  all  contingent  liabil- 
ity is  scheduled  as  a  foot  note,  for  just  there  you  may  uncover  a  sum 
that  will  cause  you  to  deny  credit.  An  instance  is  recalled  where  thte 
contingent  liability,  reluctantly  revealed,  proved  to  be  an  amount  which, 
had  the  customer  been  compelled  to  pay,  would  have  wrecked  him.  No 
statement  is  of  value  unless  signed  and  of  recent  date.  In  instances, 
more  than  one  credit  man  has  been  able  to  pick  up  valuable  information 
by  watching  the  ''paid  vouchers"  and  indorsements  thereon  before  these 
were  surrendered  in  the  settlement  of  bank  books. 


In  what  relation  does  a  good  stenographer  stand  to  the  Credit  De- 
partment? 

Ans. — He  is  indispensable  to  the  proper  care  of  the  flood  of  data 


21 


which  comes  in,  and  must  be  systematically  filed  and  recorded.  The  in- 
formation which  passes  under  his  eye  should  never  be  referred  to  outside 
his  department.  He  is  the  right  hand  of  this  department.  He  should  be 
an  expert  in  stenography  and  letter-writing,  as  well  as  in  all  forms  of 
neat  table  work  upon  the  machine. 


In  writing  confidential  letters  relative  to  the  standing  of  concerns, 
what  special  duty  devolves  upon  the  stenographer? 

Ans. — That  he  keep  a  carefully  indexed  record  of  all  letters  of  this 
character,  giving  the  date  and  the  house  referred  to  therein.  This  will 
prove  valuable  to  the  Credit  Department  in  the  event  it  shall  receive 
later  information  tending  to  disturb  or  change  previously  expressed 
opinions.  A  reference  to  this  index  will  permit  the  credit  man  to  note 
at  once  to  whom  he  has  written  and  to  amend  his  earlier  advices. 


PAYING  AND  RECEIVING  DEPARTMENT. 
What  is  money? 

Ans. — ^Any  coin  or  currency  lawfully  stamped,  employed  in  buying 
and  selling. 


What  character  of  money  is  legal  tender  for  the  payment  of  debts  in 
the  United  States? 

Ans. — Gold  coin  ;  standard  silver  dollars,  half-dollars,  quarter-dollars 
and  dimes  to  the  extent  of  $io  each ;  nickels,  two  and  one  cent  pieces  to 
the  extent  of  25  cents  each;  treasury  notes  of  1890,  unless  stipulated 
otherwise  in  the  contract ;  United  States  notes,  except  for  duties  upon 
imports ;  National  bank-notes  are  legal  tender  between  National  banks, 
and  will  be  accepted  by  the  United  States  Treasurer  for  all  public  dues 
except  duties. 


What  are  some  of  the  requisites  for  a  good  paying  teller? 

Ans. — He  should  have  a  fine  discrimination,  be  cool,  patient,  alert, 
quick,  careful,  conservative,  accurate,  of  good  address,  have  a  trained 
eye  for  crooks,  signatures  and  handwriting,  and  possess  a  goodly  meas- 
ure of  common  sense. 


How  should  the  paying  teller's  funds  be  kept? 

Ans. — With  the  utmost  degree  of  order;  clean  at  all  times,  no  rag- 
ged money;  as  large  a  proportion  of  new  notes  and  coin  as  may  be 
secured  through  all  the  channels  open  to  a  resourceful  teller.  He  can 
make  friends  for  the  bank  by  paying  out  in  handy  packages  the  money 
the  people  want. 


What  instruction  should  be  afforded  those  connected  with  the  pay- 
ing and  receiving  departments  in  the  detection  of  counterfeits? 
Ans. — ^The  very  best  that  can  be  had. 


If  the  teller  shall  be  in  doubt  as  to  the  worth  of  a  depositor's  check 

22 


when  presented  at  the  counter,  how  will  he  make  certain  before  pay- 
ment? 

Ans. — By  a  sign  known  only  to  his  assistants,  who  shall  pass  the 
word  quickly  to  the  bookkeeper  and  return  the  answer? 

If  the  bank  pays  a  check  with  signature  forged,  who  is  responsible? 
If  indorsement  is  forged,  who  is  responsible? 

Ans. — In  the  first  instance  the  paying  bank ;  in  the  second,  the  bank 
or  individual  from  whom  received,  if  same  is  brought  to  their  attention 
within  a  reasonable  time. 


How  should  checks  be  signed  representing  a  deceased  person's 
estate? 

Ans. — By  the  duly  authorized  executor  or  administrator,  after  a 
short  certificate  from  the  Register  of  Wills,  certifying  to  their  appoint- 
ment, shall  have  been  filed  with  the  bank. 


If  there  should  be  a  difference  between  the  writing  and  the  figures 
in  a  check  presented  for  payment,  which  amount  should  be  paid? 

Ans. — Call  your  depositor  up  over  the  'phone  and  be  guided  by  his 
instructions.  If  you  cannot  reach  him,  pay  the  amount  written  in  the 
body  of  the  instrument. 


Where  companies  or  partnerships  use  the  term  "Limited,*'  how 
many  signatures  are  required? 

Ans. — ^Two  in  Pennsylvania,  where  the  amount  involved  is  upwards 
of  $500. 


When  it  becomes  necessary  for  clerks  of  the  bank  to  go  upon  the 
street  with  considerable  sums  of  money  or  securities,  what  is  necessary? 

Ans. — That  two  shall  go,  and  neither  shall  become  so  engrossed  in 
conversation  as  to  forget  for  a  moment  the  guardianship  of  the  funds  en- 
trusted to  them.  This  is  not  needless  advice,  although  it  would  so  ap- 
pear. 


When  will  a  guarantee  of  indorsement  covering  items  from  another 
bank  be  sufficient? 

Ans. — When  the  guaranteeing  bank  is  of  standing  and  responsi- 
bility, and  when  the  indorsement  is  by  attorney,  or  is  by  one  person  for 
another,  or  is  by  duly  authorized  stamp. 


If  knowledge  of  the  death  of  a  depositor  reaches  the  bank,  what 
should  be  done? 

Ans. — Under  certain  conditions  outstanding  obligations  should  not 
be  paid.  We  think,  however,  that  common  sense  may  come  in  here, 
and  if  the  checks  are  regular  in  every  particular  and  are  of  recent  date 
and  are  not  large  in  amount,  the  bank  can  afford  to  carry  out  the  pur- 
poses of  the  drawer. 

23 


When  a  depositor  desires  to  delegate  to  another  authority  to  act  for 
him,  what  is  involved? 

Ans. — The  execution  of  a  power  of  attorney  wherein  he  shall  dele- 
gate to  the  one  selected,  power  to  sign  or  indorse  or  to  perform  other 
acts  relative  to  the  conduct  of  his  business.  These  powers  may  be 
limited  to  the  performance  of  one  duty,  or  may  be  so  complete  as  to  per- 
mit of  the  performance  of  all  acts  which  the  grantor  would  perform  if 
present. 

In  accepting  an  account  of  one  who  has  not  the  ability  to  write^ 
what  is  required? 

Ans. — He  may  make  his  mark  after  this  manner: — 

his 
John  X  Jones, 
mark. 
Witness : — 
Emily  Jones. 
If  he  cannot  more  than  touch  the  pen  that  will  be  sufficient.    It  is  desir- 
able, however,  that  the  witness  should  perform  the  necessary  writing  in 
completion  of  the  signature  in  all  transactions,  and  if  the  act  as  above  is 
to  be  frequently  performed,  it  is  preferable  that  a  power  of  attorney  be 
given,  delegating  another  to  act  in  his  stead. 


What  is  involved  in  "stopping  payment**  of  a  check  or  note? 

Ans. — Notice  must  be  served  on  the  paying  bank  in  writing,  giving 
an  accurate  and  full  description  of  the  item,  and  after  ascertaining  from 
the  bookkeeper  that  the  same  has  not  been  paid,  the  data  relating  there- 
to should  be  lodged  with  both  tellers,  and  a  close  watch  kept. 


What  are  snakes  in  the  cash? 

Ans. — Checks  carried  there  by  the  teller  contrary  to  the  rules  of  the 
bank.  Tellers  and  clerks  have  found  this  indulgence  costly  when  an  un- 
expected examination  of  the  cash  has  taken  place. 


When  money  or  securities  are  being  handled  or  counted  inside  the 
bank,  what  is  necessary? 

Ans. — ^That  this  be  done  at  a  point  of  safety  from  any  window  or 
doorway. 


What  is  the  rule  relative  to  the  identification  of  persons  presenting 
checks  payable  to  order? 

Ans. — That  the  identifictaion  should  be  satisfactor\  to  the  teller, 
and  he  should  be  given  latitude  to  exercise  judgment.  If  he  has  had 
experience  he  can  generally  size  up  the  payee.  This  question  of  identifi- 
cation is  a  troublesome  one  at  times  in  banks  where  the  volume  of  busi- 
ness is  large,  and  in  England  the  burden  imposed  upon  the  paying 
desks,  often  clogging  the  lines  unduly,  became  such  that  Parliament  re- 

24 


leased  the  banks  from  the  requirement  of  identification.    There  a  check 
once  received  needs  to  be  guarded  with  all  the  care  given  to  a  bank-note. 


How  should  a  past  due  note,  presented  for  payment,  be  treated? 

Ans — It  is  advisable  to  communicate  with  the  maker — common 
sense,  however,  comes  in  here — if  the  note  is  only  a  day  overdue  and  the 
amount  stood  to  the  credit  of  the  maker  upon  the  date  due,  it  is  fair 
to  assume  that  he  wanted  it  paid,  and  pay  it.  If  the  account  shows  that 
the  note  was  ''not  good"  upon  due  date,  then  it  is  possible  that  the 
maker  drew  his  balance  down  purposely  to  prevent  payment.  Such  in- 
stances have  been  known.  The  proper  and  only  right  way  for  a  maker 
to  stop  payment  of  his  note,  however,  is  to  notify  the  bank  to  that  effect 
in  advance. 


Is  it  required  that  the  bank  certify  a  check  for  an  unidentified 
indorser? 

Ans. — It  is  not  required.  Conditions  surrounding  presentation  and 
common  sense  should  govern,  however. 


How  shall  checks  be  treated  presented  without  date,  the  name  of 
the  payee  wanting  or  incomplete,  etc.? 

Ans. — Upon  a  common  sense  basis,  particularly  when  the  'phone 
is  just  at  your  right  hand  and  you  can  probably  talk  with  the  maker. 


How  should  the  checks  of  an  incorporated  company,  presented  for 
payment,  be  signed? 

Ans. — In  accordance  with  the  by-laws  or  resolutions  of  the  board 
of  directors  of  the  company,  a  copy  of  which  should  be  filed  with  the 
bank  when  the  account  is  opened,  and  an  additional  copy  when  any 
change  shall  occur  in  signatures. 


If  a  depositor  persists  in  signing  checks  or  notes  in  a  careless 
fashion,  wherein  his  signature  does  not  agree  with  the  signature  upon 
file,  what  is  advisable? 

Ans. — Call  to  his  attention. 


Would  you  pay  a  check  having  a  lead  pencil  indorsement? 

Ans. — Yes;  if  it  comes  from  another  bank  and  is  guaranteed,  and 
if  presented  at  the  counter  and  you  want  the  ink  indorsement,  the 
person  presenting  will  probably  give  it.    It  is  legal. 


What  is  involved  in  certifying  a  check  or  note? 

Ans. — It  becomes  an  obligation  of  the  bank,  and  the  Negotiable 
Instruments'  Law  adds  that  its  identification  at  the  request  of  the  holder 
discharges  the  drawer  and  all  indorsers  from  liability  thereon. 


When  the  bank  agrees  over  the  'phone  or  by  wire  to  "hold"  the 
amount  of  a  check,  what  is  implied? 

Ans. — That  the  check  is  genuine.    It  is  not  safe,  however,  to  accept 

25 


a  check  from  other  than  properly  identified  persons,  and  make  payment 
thereon,  even  though  the  bank  upon  which  it  may  be  drawn  shall  agree 
"to  hold."  Right  here  again  is  presented  the  proposition  that  the 
banker  must  know  with  whom  he  deals,  and  if  one  of  his  customers  in- 
troduces a  stranger  for  accommodation  of  this  character,  find  out  by 
pointed  inquiry  that  his  knowledge  of  the  stranger  is  unquestioned,  or 
insist  upon  indorsement.  We  recall  a  neat  swindle  perpetrated  after  in- 
troduction, in  which  the  'phone  figured. 


In  refusing  to  pay,  or  in  the  return  of  a  check  or  note,  what  answer 
should  be  given? 

Ans. — One  which  shall  give,  in  exact  terms,  the  cause  for  refusal. 


Under  what  condition  is  the  bank  released  from  liability  for  a  raised 
check? 

Ans. — Where  there  is  contributory  negligence  on  the  part  of  the 
maker.  We  recall  an  instance  where  the  bookkeeper  for  a  mercantile 
firm  filled  in  the  body  of  a  check  drawn  to  his  own  order  for  $200  for 
office  use,  leaving  space  on  the  line  and  just  in  front  of  the  words  "two 
hundred"  for  an  additional  word,  and  wrote  the  figures  in  this  manner : 
$  200,  which  permitted  the  insertion  of  an  additional  figure  between  the 
dollar  mark  and  the  figure  2.  The  check  in  this  condition  was  handed 
to  the  firm  and  signed.  The  bookkeeper  then  stepped  back  to  his  desk 
and  with  the  same  pen  and  ink  inserted  the  word  "twenty"  before  the 
word  two  and  the  figure  2  between  the  dollar  mark  and  the  figures  first 
made,  completing  the  check  in  one  handwriting,  without  blemish,  calling 
for  $2,200.  The  check  was  presented  by  the  bookkeeper  and  cashed. 
Suit  was  brought  against  the  bank,  and  the  court  very  properly  ruled 
that  the  firm  had  contributed  to  the  fraud  by  carelessly  signing  a  check 
not  filled  up  in  a  manner  to  prevent  alteration. 


What  are  the  requisites  for  a  good  receiving  teller? 

Ans. — Unfailing  courtesy,  system,  quick  work,  special  knowledge 
of  counterfeits,  the  ability  to  use  his  assistants  in  such  a  way  that  each 
man  may  fill  the  niche  for  which  he  is  adapted,  and  to  tactfully  meet  the 
customers  at  his  counter  to  the  end  that  they  will  cheerfully  co-operate 
with  him  in  cutting  down  the  line  at  his  window  by  arranging  their  de- 
posits according  to  his  instructions.  This  department  in  many  banks 
has  the  reputation  for  frequently  being  detained  into  the  night  looking 
up  differences.  This  is  largely  needless  if  the  teller  has  efficient  help, 
enough  of  it,  and  is  the  right  style  of  man  himself,  there  will  be  little 
night-work.  An  up-to-date  receiving  teller,  if  he  handles  the  mail  items, 
will  plan  his  work  to  make  a  mid-day  settlement. 


What  is  the  proper  and  safest  form  of  indorsement  for  checks  sent 
by  a  messenger  to  bank  for  deposit? 
Ans. — After  this  form  : — 

21^ 


If  a  firm : — 

If  a  company : — 


Pay  to  the  order 

of  the 

CENTRAL  NATIONAL  BANK, 

Philadelphia. 

John  Smith. 

or 

John  Smith  &  Co. 
or 


Smith  Manufacturing  Co. 
By  John  Smith,  Treas. 
If  lost  upon  the  street  it  would  be  hazardous  for  the  finder  to  at- 
tempt to  use  a  check  so  indorsed. 


In  what  manner  should  items  sent  through  the  exchanges  at  the 
Clearing  House  or  presented  at  the  counters  of  other  banks  and  trust 
companies  for  payment  be  indorsed? 

Ans. — By  a  special  form  of  stamp  adopted  by  the  board  of  directors 
of  each  bank,  in  which  shall  be  incorporated  "Received  payment 
through  the  Clearing  House."  This  stamp  "shall  be  considered  a  guar- 
antee for  all  previous  indorsements,  whether  written  or  stamped,  but 
shall  not  be  construed  as  supplying  or  guaranteeing  to  supply  a  missing 
indorsement." 


How  should  a  check  or  note  to  the  order  of  Johnson  Manufacturing 
Company  be  indorsed? 

Ans. — If  the  company  is  incorporated  the  better  form  of  indorse- 
ment is : — 

JOHNSON  MANUFACTURING  CO., 
By  Thos.  Johnson,  Treas. 
If  not  incorporated  : — 

JOHNSON  MANUFACTURING  CO., 
By  Thos.  Johnson,  Proprietor. 


When  a  check  received  from  a  correspondent  is  returned  unpaid 
from  a  neighboring  bank,  owing  to  want  of  indorsement,  what  should 
be  done? 

Ans. — If  there  is  not  a  risk  in  doing  so,  supply  the  missing  indorse- 
ment and  guarantee  it.  Your  correspondent  will  guarantee  to  you  by 
return  mail,  and  will  appreciate  your  courtesy.  If  the  item  must  go 
back,  have  it  certified  if  possible  and  protect  your  correspondent  or  his 
customer  from  possible  loss  incident  to  delay. 


What  is  a  restrictive  indorsement? 

Ans. — An  indorsement  "with  a  string  to  it" — one  that  does  not 
absolutely  lodge  the  title  to  the  instrument  in  the  bank  where  the  de- 
posit is  made,  for  example,  "for  collection,"  "for  account  of,"  "for  de- 
posit only"  and  "for  the  credit  of"  are  forms  of  restrictive  indorsement, 

27 


and  inasmuch  as  the  depositor  may  check  immediately  against  these 
funds,  even  before  opportunity  is  given  to  collect  them,  it  is  manifestly 
improper  that  he  retain  even  a  conditional  title. 

If  the  owner  of  a  check  carries  it  in  his  safe  or  wallet,  fails  to  pre- 
sent it  promptly,  and,  in  the  meantime,  the  bank  fails,  upon  whom  will 
the  loss  fall? 

Ans. — Upon  the  owner  of  the  check,  provided  it  can  be  shown  that 
prompt  presentation  would  have  meant  prompt  payment. 


Is  it  advisable  that  customers,  in  so  far  as  possible,  shall  single  out 
and  send  one  person  to  bank  for  the  purpose  of  making  deposits  or  to 
draw  counter  cash? 

Ans. — It  is  to  the  advantage  of  both  depositor  and  bank  that  some 
one  person  be  selected  for  this  duty. 


What  is  a  certificate  of  deposit? 

Ans. — An  obligation  of  the  bank  covering  a  deposit,  usually  from 
other  than  regular  depositors.  It  may  be  drawn  payable  on  demand  or 
for  a  specified  time ;  in  the  latter  case  it  may  bear  interest  at  a  low  rate 
agreed  upon.  If  the  signature  of  the  party  to  whom  the  certificate  is 
made  payable  is  not  upon  file  in  the  bank,  it  should  be  taken  in  issuing 
the  certificate,  and  it  is  important  that  all  such  certificates  shall  be  so 
carefully  filled  in  as  not  to  permit  of  alteration. 


What  is  involved  in  an  account  opened,  Thos.  Johnson,  Trustee? 

Ans. — It  may  mean  much  or  little,  and  when  accepted  in  this  way  a 
careful  analysis  of  what  this  particular  trusteeship  involves  should  be 
recorded  with  the  signature.  It  is  not  likely  that  any  embarrassment 
or  entanglement  will  arise  while  Johnson  lives,  but,  in  the  event  of  de- 
cease, not  only  the  bank  but  all  who  may  be  interested  in  his  affairs  will 
want  to  know  to  whom  these  funds  belong,  and  it  may  not  be  easy  to 
draw  against  the  same  unless  the  authority  is  unquestioned.  Every  ac- 
count so  opened  should  state  what  is  covered  by  the  trust  at  its  incep- 
tion. 


When  a  check  or  note  shall  have  been  cut  in  error  upon  the  teller's 
file,  what  is  required? 

Ans. — That  the  cut  shall  be  guaranteed  before  returning  the  item. 


What  is  meant  by  Gearing  House  Gold  Certificates,  United  States 
Treasury  Gold  Certificates  and  United  States  Legal  Tender  Certificate? 

Ans. — These  certificates  represent  gold  coin  deposited  with  the 
Clearing  House  or  with  the  Assistant  Treasurers  of  the  United  States, 
or  legal  tender  notes  deposited  with  Assistant  Treasurers,  and  are  used 
in  lieu  of  the  cash  itself  in  discharging  the  balances  at  the  Clearing 
House  between  banks,  with  the  exception  of  fractional  amounts  under 
$5,000,  which  are  paid  by  bank  due-bill.  When  gold  or  notes  are  needed 
for  counter  use,  these  may  be  drawn  at  either  depository. 

28 


What  constitutes  light-weight  coin,  as  determined  by  the  United 
States  statutes? 

Ans. — The  loss  of  one-half  of  one  per  cent  in  gold  coins  will  com- 
pel the  Treasury  Department  to  stamp  the  same  "short,"  It  will  then 
need  to  be  sold  for  merchandise,  or  the  United  States  Mint  will  pur- 
chase as  bullion  at  $20.67  P^^  troy  ounce,  and  will  make  no  charge  for 
recoinage. 

Silver  coin  light  and  uncurrent,  if  not  altered  in  any  manner  except 
by  natural  abrasion,  to  which  there  is  practically  no  limit,  so  long  as  the 
coin  may  be  identified  and  does  not  show  material  loss  of  metal,  will  be 
redeemed  by  the  Treasury  Department. 


If  $5,000  of  United  States  gold  or  silver  coins,  by  accident  of  fire 
shall  be  melted  to  a  mass  and  cannot  be  identified  as  coin,  upon  what 
terms  will  it  be  received  at  the  mint  for  recoinage? 

Ans. — If  gold  cannot  be  identified  as  coin  the  government  will  pay 
for  it  as  gold  bullion  at  $20.67  P^^  ounce  troy  weight,  after  deducting 
the  usual  charges  for  coinage.  If  it  can  be  identified  the  charges  for 
coinage  will  not  be  imposed.  If  silver  is  melted  to  a  mass  and  cannot  be 
identified  as  coin,  the  government  will  not  purchase  it,  but  if  the  identi- 
fication can  be  established,  it  will  be  purchased  upon  the  same  terms  as 
mutilated  coin,  paying  the  current  rate  for  it.  The  loss  to  the  holder  in 
case  of  silver  is,  therefore,  the  difference  between  the  face  and  what  it 
will  bring  as  bullion,  or  for  merchandise  uses. 


Of  what  advantage  is  It  to  this  department  in  following  the  "Daily 
Court  Record"  of  judgments  entered  and  new.  suits  brought  in  the 
courts? 

Ans. — Here  are  recorded  all  judgments  entered  up  or  satisfied  and 
all  suits  begun  upon  the  day  preceding,  and  this  schedule,  if  carefully 
examined,  will  ofttimes  disclose  the  first  intimation  of  entanglement  or 
embarrassment. 


In  re-discount  for,  or  making  loans  to  a  bank,  what  is  necessary  as 
a  preliminary? 

Ans. — That  a  resolution  shall  be  adopted  by  the  board  of  directors 
of  the  borrowing  bank  and  a  copy  of  the  same  lodged  with  the  bank 
making  the  loan.  This  copy  should  bear  the  signature  of  the  secretary 
of  the  board  and  the  president  of  the  bank,  and  the  seal  of  the  bank 
should  also  be  affixed.  It  is  advisable  that  the  loaning  bank  shall  have 
its  own  form  of  resolution  covering  this  class  of  loans,  which,  when  once 
adopted,  should  serve  for  future  transactions  between  the  parties  to  the 
contract. 


How  may  the  management  of  the  bank  keep  a  close  run  of  income 
account  and  know  if  the  current  period  is  up  to  the  standard? 

Ans. — By  recording  in  a  foHo  for  that  purpose  in  parallel  columns, 

29 


the  total  standing  to  credit  to  this  account  each  day.  By  following  the 
same  line  across  the  page  at  a  glance  it  may  be  determined  how  the 
present  half  year  to  date  is  as  compared  with  previous  half  years — 
whether  measuring  up  to  or  falling  back. 


How  should  the  record  of  bad  debts  charged  off,  be  kept? 

Ans. — This  is  a  place  for  system  again,  and  the  data  relating  to 
these  claims  should  be  lodged  in  strong  envelopes  (linen-lined  prefer- 
able) with  a  neat  record  on  the  outside.  Many  banks  also  keep  a  folio 
record  of  claims  of  this  character,  and  make  a  point  to  renew  judgments 
obtained  from  time  to  time.  A  close  watch  upon  the  doubtful  debts  will 
pay. 


COLLECTION  AND  MESSENGER  DEPARTMENT. 

What  constitutes  a  Domestic  Bill  of  Exchange? 

Ans. — Bills  of  bankers  upon  other  bankers,  checks  and  commercial 
bills  issued  by  merchants,  sometimes  accompanied  by  bill  of  lading. 
Exchange  between  two  points,  say  New  York  and  Philadelphia,  may 
rule  abundant  one  week  and  scarce  the  next — if  balances  accumulate 
too  largely  at  either  end,  and  bills  of  exchange  cannot  be  secured,  then 
recourse  must  be  had  to  the  shipment  of  gold  or  currency.  At  times, 
between  certain  points,  domestic  exchange  is  either  bought  or  sold  at  a 
discount  or  premium,  after  the  manner  of  foreign  exchange 


How  would  you  define  the  drawer,  the  drawee,  the  payer,  the  payee, 
the  indorser,  the  indorsee,  the  pledgor,  the  pledgee,  the  consignor  and 
the  consignee? 

Ans. — The  drawer  and  maker  is  the  one  from  whom  an  instrument 
emanates,  whether  it  be  check,  draft  or  note ;  the  drawee  is  the  one 
drawn  upon  and  becomes,  after  acceptance,  the  acceptor  and  payer ;  the 
payer  is  either  the  maker  of  a  note  or  check,  or  the  acceptor  of  a  draft ; 
the  payee  is  one  to  whose  order  a  check,  note  or  draft  may  be  payable ; 
the  indorser  is  the  payee  after  adding  his  indorsement ;  the  indorsee  is 
the  one  to  whom  the  instrument  is  indorsed  over;  the  pledgor  is  one 
who  pledges  his  collateral  for  a  loan ;  the  pledgee  is  the  one  who  re- 
ceives this  collateral ;  the  consignor  is  the  one  who  ships  his  goods  to  a 
consignee,  who  receives  the  goods. 


What  is  one  of  the  most  important  requisites  in  handling  promis- 
sory notes? 

Ans. — Absolute  accuracy  in  arriving  at  the  maturity  date  of  a  note. 
This  is  one  of  the  last  places  in  a  bank  where  an  error  may  be  tolerated. 


If  a  note  is  dated  November  28,  29  or  30,  1900,  at  90  days ;  or  is 
dated  December  2,  1903,  at  90  days,  when  does  it  mature? 

Ans. — Matures  respectively  February  26,  27  and  28,  1901,  and 
March  i,  1904.    If  any  of  these  maturity  dates  fall  upon  Saturdays,  Sun- 

30 


days  or  holidays,  which  are  dead  dates  as  to  the  maturity  of  paper,  the 
note  goes  over  until  the  next  succeeding  business  day. 

If  a  note  is  dated  November  28,  29  or  30,  1900,  at  three  months,  or 
December  28,  29,  30  or  31,  1900,  at  two  months,  or  November  28,  29 
or  30,  1903,  at  three  months,  or  December  28,  29,  30  or  31,  1903,  at  two 
months,  when  does  it  mature? 

Ans. — In  the  first  seven  examples  February  28,  1901 ;  in  the  re- 
maining instances  the  notes  dated  November  28  and  December  28,  ma- 
ture February  28,  1904,  and  in  all  the  other  examples  the  maturity  is 
February  29,  1904.    Keep  your  eye  upon  leap  year. 


Are  there  advantages  to  the  mercantile  community  in  drawing 
notes  payable  upon  a  certain  date  rather  than  at  one,  two  or  three 
months,  or  thirty,  sixty  or  ninety  days  after  date? 

Ans. — Unquestionably.  The  inexperienced  are  always  liable  to  err 
in  timing  notes  drawn  after  the  old  fashion,  causing  needless  protests; 
under  that  plan,  too,  it  was  a  sort  of  "hit  or  miss"  arrangement  as  to  the 
maturity  date.  This  might  happen  to  be  Saturday,  Sunday,  pay-roll  day 
or  the  day  other  notes  had  to  be  met.  The  further  advantage  is  the  vast 
saving  of  time  and  labor  to  accountants  everywhere. 


In  what  manner  should  Bills  Receivable  be  filed  away,  and  how 
long  before  maturity  should  out-of-town  notes  be  forwarded  for  collec- 
tion? 

Ans. — Sorted  according  to  maturity  date,  and  this  is  work  requir- 
ing care.  Out-of-town  notes  should  be  sent  away  two  weeks  prior  to 
maturity  when  received  in  time  to  permit. 


Is  the  bank  compelled  by  law  to  send  notices  for  notes  not  made 
payable  at  bank  (Pennsylvania)? 

Ans. — The  sending  of  notices  is  a  matter  of  custom  and  courtesy, 
but,  nevertheless,  the  utmost  care  should  be  exercised  in  this  particular 
and  every  effort  made  to  notify  the  makers  of  notes  not  made  payable  at 
bank.  These  notices  should  be  enclosed  in  envelopes  plainly  addressed. 
The  maker  of  a  note  has  cause  to  be  irate  if  his  notice  is  misdirected  and 
falls  into  other  hands,  thereby  revealing  his  private  business. 


Why  is  a  check,  draft  or  note  protested? 

Ans. — A  note  is  protested  to  prevent  the  indorser  or  indorsers  from 
being  released  from  payment  in  the  event  the  maker  does  not  pay. 
Where  due  diligence  has  been  given  to  collect  an  item  an  indorser  is 
morally  bound,  but  cannot  legally  be  held  unless  protest  or  notice  of 
default  is  made.  By  protest  is  meant  that  the  item,  at  the  close  of  the 
business  day  upon  which  it  is  payable,  is  handed  to  a  notary,  who  re- 
ceives his  license  from  the  State,  and  who  presents  the  item  to  the  maker 
or  bank  where  payable  and  demands  payment.  If  refused,  he  makes  a 
note  of  the  reasons  given,  and  if  none  are  to  be  had  he  notes  that  fact, 
and,  upon  his  return  to  his  office,  the  same  day,  he  fills  up  a  form  pre- 

31 


scribed  by  the  State,  in  which  he  sets  forth  a  complete  copy  of  the  in- 
strument he  is  protesting,  states  how  and  when  presented  for  payment 
and  the  refusal  therefor,  affixes  his  seal  and  signature,  and  to  this  blank 
attaches,  generally  by  wafer,  the  instrument  itself.  Upon  other  forms 
provided,  he  likewise  prepares  and  sends  out  notices  of  protest  for  the 
maker  and  all  indorsers  thereon,  and,  if  possible,  serves  these  notices  in 
person ;  if  at  a  distance,  they  are  mailed  by  first  mail.  Very  many  items 
go  to  protest  where  there  is  not  an  indorser,  and,  in  these  cases,  the 
protest  is  dictated  from  policy.  Many  are  of  the  opinion  that  a  check, 
draft  or  note  even  if  there  is  no  indorser,  had  better  be  protested ;  then, 
in  case  suit  is  brought,  the  protest  papers  attached  afiford  evidence  that 
regular  and  formal  presentation  and  demand  was  made. 

If  a  contingency  arise  (more  likely  to  happen  in  a  small  banking 
community  than  elsewhere)  that  a  notary  is  not  to  be  had,  to  effect  a 
protest  upon  the  day  a  note  is  payable,  a  formal  demand  should  be  made 
upon  the  maker,  or  bank  where  payable,  and  this  can  be  done  by  an 
employee  of  the  bank  holding  the  item ;  the  maker  and  all  others  upon 
the  note  should  be  promptly  notified  in  writing  that  they  are  held  re- 
sponsible for  the  note.  In  most  States,  if  this  formality  is  carefully  per- 
formed, the  courts  will  hold  the  indorser. 

The  Negotiable  Instruments'  Law  adds  that  when  a  note  has  been 
lost  in  the  mails,  and  dupUcate  cannot  be  had  in  time  for  maturity,  pro- 
test may  be  made  on  a  copy  or  written  particulars  thereof. 


Would  a  considerable  percentage  of  protests  be  saved  if  all  notes 
were  made  payable  at  bank  where  the  maker  keeps  his  account? 
Ans. — Unquestionably,  and  considerable  heartburn,  too. 


Is  it  customary  to  protest  a  time  draft  both  for  non-acceptance  and 
for  non-payment,  making  two  protests  for  one  item? 

Ans. — It  is  generally  protested  twice,  although  it  is  claimed  there 
is  not  legal  need.  Common  sense  coming  in  here  will  generally  be  able 
to  find  a  way  to  save  the  double  protest. 


What  is  meant  by  indorsing  "without  recourse"? 

Ans. — The  term  is  recognized  by  the  courts  as  a  mere  assignment 
of  title  to  the  instrument,  and  as  releasing  one  who  incorporates  the 
term  in  his  indorsement  from  all  liability.  That  is,  a  note  given  by 
Samuel  Small  to  Isaac  Joyce,  and  by  him  indorsed  "without  recourse," 
is  a  single-name  obligation  in  so  far  as  responsibility  is  involved.  It  is 
well  for  the  bank  to  make  use  of  the  term  when  compelled  to  indorse 
certain  items  wherein  it  should  not  assume  responsibility.  This  is  often 
true  of  bills  of  lading  indorsed  to  a  bank  for  safety  in  transit ;  in  order 
that  the  consignee  may  secure  the  goods  from  the  railroad  company  the 
bill  of  lading  will  need  indorsement  by  the  bank,  but  here,  the  bank  not 
being  a  party  to  the  transaction  further  than  acting  as  collection  agent 
for  the  draft  which  the  bill  of  lading  accompanies,  does  not  want  to 
assume  any  responsibility  and  indorses  "without  recourse." 

32 


When  the  note  of  a  firm  of  hitherto  good  standing  is  unpaid  at  3 
o'clock,  should  it  be  summarily  handed  to  the  notary? 

Ans. — If  time  permits,  first  call  the  makers  up  over  the  'phone  and 
see  if  it  has  been  overlooked.  This  is  an  act  of  courtesy  which  will  be 
appreciated.  It  is,  however,  not  possible  to  make  a  universal  rule  of 
this  kind — conditions  are  not  always  favorable. 


Is  it  important  that  collection  items  and  all  cash  items  where  so  in- 
tended shall  be  promptly  advised? 

Ans.— It  is,  and  this  should  be  done  upon  slips  sent  out  through  the 
evening  mail.  These  advices  should  not  only  embrace  items  paid,  but 
items  ''gone  to  the  notary." 


In  recalling  a  note  by  wire  or  by  telephone,  what  information 
should  be  incorporated  in  the  recall? 

Ans. — The  use  of  a  term  or  cipher  word,  or  some  particular  data 
known  only  at  both  ends  of  the  line. 


If  the  bank  accepts  a  check  in  payment  of  a  draft  instead  of  cash, 
and  does  not  present  for  payment  or  certification  until  the  next  day,  and 
the  check  is  dishonored  in  consequence  of  the  delay  and  the  draft  was  a 
protestable  item,  where  does  the  bank  stand? 

Ans. — It  will  be  liable. 


Is  it  customary  for  the  messenger  to  leave  drafts  for  acceptance 
with  firms  upon  the  street? 

Ans. — It  is  where  they  are  responsible.  This  is,  however,  a  matter 
of  courtesy  on  the  part  of  the  bank,  and  drafts  so  left  should  invariably 
be  returned  to  the  bank  before  3  o'clock,  accepted  or  refused;  in  the 


latter  case,  with  "reasons"  noted. 


When  the  messenger  receives  back  a  draft  from  the  hand  of  an  ac- 
ceptor, what  is  necessary? 

Ans. — That  the  acceptance  just  written  be  minutely  examined  as  to 
its  correctness.  If  drawn  for  a  period  of  time  from  sight,  it  should  be 
dated.  Be  quite  sure  the  signature  has  been  affixed.  It  is  not  an  infre- 
quent occurrence  for  drafts  to  be  handed  back  with  the  acceptance  all 
there  but  the  signature.  Another  point  in  connection  with  this  exami- 
nation of  acceptance,  is  in  establishing  to  a  certainty  the  right  of  the 
one  who  accepts  to  so  act.  The  runner  soon  gets  to  know  the  people 
upon  his  route,  and  there  is  no  liability  of  his  being  tripped  up  by  estab- 
lished houses,  but  occasionally  he  will  have  reason  to  doubt  if  the  per- 
son accepting  has  a  legal  right  to  accept,  and,  in  this  case,  it  is  his  duty 
to  ascertain  if  this  person  has  been  granted  a  power  of  attorney.  Not 
many  would  venture  to  sign  as  attorney  without  authority,  but  at  times 
drafts  will  be  handed  back  to  the  messenger,  accepted  after  this  fash- 
ion : — 

John  C.  Simmons, 
per  E.  S. 

33 


And  these  are  more  than  Hkely  illegal  acceptances.  A  clerk  or  book- 
keeper in  the  office  knows,  or  thinks  he  knows,  that  the  proprietor 
would  accept  if  he  were  in,  or  the  proprietor  may  say  to  him,  ''If  that 
draft  comes  in,  just  accept,''  and  somebody  ''chances"  it.  The  messen- 
ger should  decline  to  permit  an  acceptance  of  this  character  and  may 
demand  to  see  a  copy  of  power  of  attorney.  Where  bill  of  lading  is  to 
be  declared,  there  should  not  be  a  shadow  of  a  doubt  as  to  the  proper 
acceptance. 


Is  it  proper  to  permit  an  acceptance  to  be  erased  from  a  draft  after 
once  made? 

Ans. — No ;  the  bank  only  acts  as  agent,  knows  nothing  of  the  con- 
tract between  the  parties  and  the  acceptance  must  stand.  The  drawee, 
if  he  has  erred  in  accepting,  may  "stop  payment,"  and  notify  all  upon  the 
draft  of  his  reasons  for  so  doing. 


Are  messengers  upon  the  street  vested  with  authority  to  promise 
the  drawees  that  drafts  will  be  "held"? 

Ans. — They  are  not,  and  caution  is  very  necessary  in  making  any 
promise.  Such  arrangements  can  only  be  entered  into  between  the 
drawees  and  the  officers  of  the  bank,  and  the  latter  are  often  "tied"  by 
instructions  from  their  correspondent. 


In  returning  drafts  unpaid,  marked  "no  protest,"  what  is  required 
by  courtesy? 

Ans. — That  the  reasons  for  refusal  be  noted  upon  the  draft  in  as 
exact  terms  as  may  be  possible. 


If  a  time  draft  is  received  with  bill  of  lading  attached  and  the  ac- 
ceptor demands  the  bill  of  lading  upon  acceptance,  in  the  absence  of 
instructions  what  shall  be  done? 

Ans. — Legal  advice  in  Pennsylvnaia  is  to  the  effect  that  the  bill  of 
lading  must  be  delivered.  Common  sense  comes  in  here  again,  how- 
ever, and  if  you  have  reason  to  think,  from  his  reputation,  that  the 
drawee  will  take  advantage  of  the  drawer,  you  may  be  able  to  save  the 
latter  by  a  little  diplomacy.  Put  off  the  drawee  long  enough  to  wire  for 
instructions  and  save  the  man  at  the  other  end  from  being  victimized. 

If  drafts  are  not  accepted  when  presented,  and  are  held  with  bill  of 
lading  attached  pending  instructions,  what  is  necessary? 

Ans. — That  the  bill  of  lading  be  carefully  examined  for  perishable 
merchandise.  Due  diligence  must  be  exercised  by  the  bank  that  loss 
does  not  occur  from  delay  in  disposition  of  the  merchandise. 


How  shall  drafts  payable  upon  arrival  of  merchandise  be  treated? 

Ans. — The  first  requisite  is  that  they  come  to  you  with  "no  pro- 
test" instructions.  The  bill  of  lading  should  be  examined  as  to  the  char- 
acter of  the  goods  and  the  point  of  shipment.  In  order  that  the  bank 
may  approximate  the  time  of  arrival,  the  draft  should  be  presented  at 
once  and  notice  left.    If  not  paid  within  a  reasonable  time,  the  drawee 

34 


must  be  interviewed,  your  correspondent  advised  of  all  delays  and  his 
instructions  sought. 


If  the  messenger  or  note  teller  receives  a  v^orthless  check  in  pay- 
ment of  a  draft  or  note,  who  will  lose  the  amount? 

Ans — The  bank  accepting  the  same  in  payment.  The  Messenger 
and  Collection  Department  should  keep  in  touch  with  the  responsibility 
of  that  portion  of  the  commercial  community  upon  whom  they  will  pre- 
sent drafts,  and,  if  new  names  come  up,  in  so  far  as  possible  these  should 
be  "looked  up"  before  the  messenger  leaves  the  bank  upon  his  morning 
route.  If  in  a  serious  dilemma  while  upon  the  street,  as  to  any  particu- 
lar transaction,  let  him  telephone  the  bank  for  instructions. 


How  can  the  messenger  upon  the  street  be  of  service  to  his  bank? 

Ans. — By  unfailing  courtesy  and  by  the  exercise  of  judgment  and 
discrimination  he  can  make  many  friends  for  the  institution.  If  he  is 
too  narrow  or  exacting  with  the  commercial  community  he  can,  on  the 
contrary,  do  his  bank  an  injury. 


Are  there  dangers  to  be  encountered  in  receiving  transient  collec- 
tions from  other  than  banks  and  bankers? 

Ans. — There  are.  If  you  receive  a  check  upon  another  city  bank, 
or  upon  your  own  bank  in  this  way,  and  the  check  has  been  stolen  from 
the  mails  and  the  indorsement  forged,  your  ''stamp"  will  make  the  pay- 
ing bank  look  to  you  to  make  it  good,  and,  if  upon  your  own  bank,  you 
will  be  liable  for  the  forged  indorsement.  In  remitting  for  transient 
items,  great  care  should  be  exercised  in  filling  up  bank  drafts,  as  this 
scheme  has  been  worked  to  gain  possession  of  bank  drafts  for  the  pur- 
pose of  alteration. 


What  advantages  are  there  to  the  messenger  in  keeping  in  touch 
with  the  more  experienced  messengers  from  other  banks  while  "on 
change"? 

Ans. — Without  disclosing  the  private  interests  of  his  own  bank,  he 
can,  at  the  same  time,  by  comparing  notes  with  the  other  messengers, 
learn  much  relating  to  the  "crooked  people"  upon  the  street,  and  how 
best  to  guard  against  those  who  would  be  disposed  to  take  an  unfair 
advantage. 


How  shall  items  forwarded  for  acceptance  and  return  be  treated? 

Ans. — If  the  time  before  maturity  is  short,  suggest  to  the  customer 
that  he  indorse  the  item  and  that  it  remain  with  your  correspondent 
until  maturity.  If  it  is  a  long-time  acceptance,  forward  it  without  in- 
dorsement, but  bearing  a  ticket  marked  "for  acceptance  and  return"  to 
your  bank. 


Where  should  a  note  be  forwarded  for  collection,  dated,  say,  at 
Philadelphia,  but  not  made  payable  at  any  particular  place,  made  by  a 
maker  residing  in  Baltimore  and  not  having  an  ofHce  in  Philadelphia? 

35 


Ans. — To  Baltimore.  This  is  one  of  the  pitfalls  at  the  collection 
desk,  and  should  be  carefully  guarded  at  the  time  the  note  is  received. 
The  correct  business  address — if  such  there  be,  if  not,  his  house  ad- 
dress— should  be  obtained.  Throw  the  burden  of  providing  the  correct 
address  back  upon  the  owner  of  the  note. 


What  are  coupons  and  what  is  involved  in  handling  them? 

Ans. — These  are  small  demand  obligations,  promises  to  pay  quar- 
terly, semi-annual  or  annual  interest  upon  the  principal  of  a  debt,  usually 
bonds.  They  are  clipped,  at  about  the  due  date  from  the  bond  or  in- 
strument itself,  and,  owing  to  their  diminutive  size,  require  time  and 
much  care  in  handling  to  prevent  loss.  This  department  should  keep 
a  careful,  indexed  record  of  the  places  of  payment  for  all  coupons,  as 
changes  from  the  place  named  upon  them  frequently  occur.  All  old 
envelopes  in  which  coupons  are  received,  should  be  sorted  according  to 
date  and  kept  for  a  time. 


What  are  legal  holidays  in  Pennsylvania? 

Ans. — New  Year's  Day,  Lincoln's  Birthday,  third  Tuesday  in 
February,  Spring  Election  Day,  Washington's  Birthday,  Good  Friday, 
Decoration  Day,  Independence  Day,  Labor  Day,  first  Tuesday  after  the 
first  Monday  in  November  (Election  Day),  Thanksgiving  Day,  Christ- 
mas. All  notes  falling  due  upon  hoUdays,  Saturdays  or  Sundays,  are 
payable  the  next  secular  or  business  day.  Holidays  falling  upon  Sunday 
are  observed  Monday. 


In  what  States  have  days  of  grace  been  abolished?    In  what  States 
retained? 

Ans. — Grace  has  been  abolished  in  the  following  States : — 

California,  New  Jersey, 

Colorado,  New  York, 

Connecticut,  North  Dakota, 

Delaware,  Ohio, 

District  of  Columbia.  Oregon, 

Florida,  Pennsylvania, 

Idaho,  Rhode       Island       (except      sight 

Illinois,  drafts), 

Maryland,  Tennessee, 

Maine  (except  sight  drafts),  Utah, 

Massachusetts        (except        sight     Vermont, 

drafts),  Virginia, 

Montana,  Washington, 
New     Hampshire     (except     sight     West  Virginia, 

drafts),  Wisconsin. 

36 


Grace  is  retained  in  the  following  States : — 

Alabama,  Nebraska, 

Alaska,  Nevada, 

Arizona,  New  Mexico, 

Arkansas,  '  North  Carolina, 

Georgia,  Oklahoma, 

Indian  Territory^  South  Carolina^ 

Indiana,  Kentucky, 

Iowa,  Louisiana^ 

Kansas,  Michigan; 

Minnesota,  South  Dakota, 

Mississippi,  Texas, 

Missouri,  Wyoming. 


What  is  meant  by  due  diligence  in  forwarding  collections? 

Ans. — Forwarding  by  a  route  which  is  direct,  without  delays,  and 
selecting  a  bank  at  the  destination  of  the  item  offering  the  largest  meas- 
ure of  protection  to  the  forwarder  in  point  of  responsibility.  For  ex- 
ample, if  you  were  sending  a  draft  to  an  interior  point  and  there  were 
only  two  banks  at  that  point,  one  with  capital  and  surplus  of  $125,000 
and  another  with  capital  and  surplus  of  $380,000,  other  things  equal, 
you  would  select  the  latter  bank. 


Can  the  loss  of  money  or  securities  sent  by  registered  mail  be  recov- 
ered from  the  United  States? 

Ans. — The  government  is  liable  for  amounts  up  to  $10.  Beyond 
that,  it  only  agrees  to  throw  around  transmissions  of  this  character  safe- 
guards consistent  with  the  service. 


In  forwarding  bonds  by  express  or  by  insured  registered  mail,  what 
is  necessary? 

Ans. — That  a  record  of  the  numbers  be  made  and  that  the  securities 
be  not  undervalued,  except  at  the  risk  of  the  owner.  If  the  bank  is  in- 
terested in  any  way  in  these  securities  as  collateral  do  not  undervalue. 


If  the  messenger,  while  upon  his  daily  route,  shall  receive  more 
cash  than  is  safe  for  him  to  carry  upon  the  street,  what  is  advisable? 

Ans. — That  he  either  endeavor  to  get  a  friendly  and  responsible 
bank  to  take  it  oflf  his  hands,  or  that  he  'phone  the  bank  to  have  another 
messenger  meet  him  at  a  given  point. 


GENERAL  LEDGER  DEPARTMENT. 

What  is  meant  by  the  Legal  Reserve  of  a  National  bank  and  of  what 
may  this  consist? 

37 


Ans. — The  Legal  Reserve  of  a  National  bank  is  25  per  cent  of  the 
deposits  of  the  bank,  if  located  in  Central  Reserve  or  Reserve  Cities, 
and  15  per  cent  of  deposits  for  all  banks  otherwise  located.  This  reserve 
may  consist  of  gold  coin,  gold  certificates,  silver  dollars,  silver  certifi- 
cates, legal  tender  notes,  5  per  cent  redemption  fund,  amounts  due  upon 
demand  from  the  United  States  Treasury,  the  proportionate  amount  of 
balances  due  from  reserve  agents,  which  proportion  for  banks  located  in 
Reserve  Cities  is  12J  per  cent,  and  for  all  others  3-5  of  15  per  cent,  or 
9  per  cent,  with  the  exception  that  banks  located  in  Central  Reserve 
Cities  shall  keep  the  entire  25  per  cent  in  their  vaults. 


How  should  a  bank  draft  or  check  be  filled  up? 

Ans. — Neatly,  in  good  black  ink  in  heavy  writing,  and  in  a  way  not 
to  permit  of  alteration.  This  should  be  done  by  packing  the  figures  in 
close  to  the  dollar  mark  and  by  writing  the  amount  in  the  body  at  the 
very  beginning  of  the  line,  filling  in  all  blank  space  with  a  heavy  black 
line.  This  advice  may  seem  very  elementary,  but  we  are  writing  for  the 
benefit  of  the  younger  men,  and  more  than  one  bank  has  found  out  to 
its  cost  that  carelessness  in  this  respect  does  not  pay. 


What  should  be  done  with  cancelled  bank  drafts? 

Ans. — These  should  be  returned  to  the  drawer  with  each  account- 
current  and  should  be  duly  acknowledged  by  your  correspondent.  This 
prevents  the  bank  from  becoming  lumbered  up  with  ''paid  vouchers," 
and  throws  back  upon  the  drawing  bank  the  burden  of  detecting,  with 
reasonable  promptness,  anything  out  of  proper  with  "paid  drafts,"  either 
in  point  of  genuineness,  amount  or  indorsement,  and  will  also  aid  the 
paying  bank  when  instructions  come  to  ''stop  payment"  of  a  draft — then 
it  only  becomes  necessary  to  run  through  the  vouchers  for  the  current 
month  in  order  to  detect  if  this  particular  draft  has  been  paid. 


What  interest  calculations  will  this  department  be  called  upon  to 
make? 

Ans. — Upon  daily  balances  to  banks,  taking  365  days  to  the  year. 
The  tables  in  use  these  days  for  this  purpose  are  indispensable  for  quick 
work,  but  every  bank  clerk  should  know  how  to  work  out  the  problem 
by  some  short  method  independent  of  the  tables.  This  can  be  done  in  a 
variety  of  ways,  and  those  expert  in  mental  arithmetic  will  probably  find 
even  a  shorter  cut  from  the  following :  Take  the  sum  of  the  daily  balances, 
even  thousands,  for  the  month,  multiply  by  four,  point  off  three  points 
and  divide  by  73 ;  for  example,  the  daily  balances  of  an  account  for  a 
month  aggregate,  say,  $1,250,000;  multiplied  by  4  you  have  $5,000,000; 
divided  by  73  you  have  the  result,  $6849. 


Why  is  it  advisable  to  carry  as  few  debit  balances  as  possible  aside 
from  balances  with  approved  Reserve  Agents? 

Ans. — From  a  double  standpoint :   You  can  employ  your  funds  to 

38 


better  advantage,  and  by  keeping  down  this  item,  you  minimize  the  risk 
of  being  caught  as  a  creditor  in  the  event  of  bank  failures.  All  banks 
are  compelled  to  carry  a  certain  proportion  of  these  debit  accounts,  but 
they  should  be  reduced  to  the  minimum  and  care  used  in  their  selection. 
A  schedule  should  be  kept  at  this  desk  of  the  remitting  days  of  each  ac- 
count and  carefully  checked  off  from  day  to  day. 

Is  it  important  to  prevent  overdrafts  by  bank  correspondents? 

Ans. — Of  the  utmost  importance ;  the  General  Ledger  Department 
should  aid  the  Paying  Desk  to  the  fullest  extent  in  this  respect.  Banks 
carelessly  managed  or  upon  the  eve  of  collapse  will  often  try  to  over- 
draw.   Be  upon  your  guard. 

How  should  the  Daily  Statement  of  the  bank  be  made  up? 

Ans. — Probably  no  two  institutions  incorporate  exactly  the  same 
data  in  the  same  form  in  making  up  these  statements,  but  in  essentials, 
all  comply  with  the  National  Banking  act.    The  following  is  one  form : — 

Date 

LOANS 

Time  Loans  $6,280 

Temporary  Loans 775 

Demand  Loans 1^244 

U.  S.  Loans 50 

Bonds  and  Securities 236 

Over-night  Loans  in  Cash  00  $8,585 

DEPOSITS 

Individual  Deposits   $6,078 

Less  Exchanges   340  $5,738 

Bank  Deposits 3,802 

Less  Exchanges   199  $3,603  $9,341 

Circulation  Outstanding  50 

National  Bank-notes  in  Cash 2 

CASH  RESERVE 

Gold  C.  H.  Certificates  $435 

U.  S.  Treasury  Gold  Certificates 650 

Gold   Coin    195 

Silver  Coin 39  $1 ,3 19 

Legal  Tender  Notes 152 

Five  Per  Cent  Redemption  Fund 2 

Due  from  U.  S.  Treasury  on  Demand o 

$1,473 
39 


Due  to  C.  H.  Banks 


44  $1,429 


Due  by  Banks  out-of-town.  $2,179 
Due  by   City  Trust  Com- 
panies    20 


2,199 
Due  by  other  than  Reserve 

Agents   306 

New  York  Res .  i ,500  )  ■■ 

Chicago        "       350  VDue  by  Reserve  Agents..     1,893 
St.  Louis      "43) 

Due  to  Reserve  Agents . . .        533 
Net  amount  due  from  Re-  - 

serve  Agents 1,360 

Excess   Reserve  due  from 

Reserve  Agents   231  $1,129 


Total  Cash  Reserve 


Reserve  Required  ^ 


2,558  —28% 


Net  Deposits $9,34i 

Less  due  from  Banks 306 


.  25%  of   9,035  is  2,259 


Excess  Cash  Reserve  . . 
Excess  N.  Y.  Reserve  . . 
Total  of  Excess  Reserve 


299 
231 
530 


Where  should  a  careful  description  and  record  of  the  numbers  of  all 
securities  owned  by  the  bank  be  lodged? 
Ans. — In  the  General  Ledger. 


In  drawing  a  bank  draft,  would  you  draw  it  to  Thomas  Dunlap, 
Esq.,  or  Mr.  Thomas  Dunlap? 
Ans. — To  Thomas  Dunlap. 


What  is  necessary  in  the  examination  and  proof  of  an  intricate  ac- 
count current? 

Ans. — The  first  requisite  is  an  accurate  account  from  your  corre- 
spondent, and  this  with  a  reconcilement  of  the  previous  account  at  hand ; 
the  procedure  is  simple :  All  drafts  should  be  checked  ofif  by  numbers ; 
see  that  for  each  debit  you  have  a  corresponding  credit,  and  for  each 
credit  a  corresponding  debit ;  after  all  amounts  possible  in  the  account 
under  examination  have  been  checked,  then  arrange  the  new  reconcile- 
ment of  all  unchecked  items  under  the  following  headings,  treating  bal- 
ances the  same  as  differences : — 


We  Charge 

We  Credit 

You  Charge 

Balance 

You  Credit 

Balance 

Total          .   .   . 

Total 

If  both  accounts  are  accurate  these  totals  will  be  the  same.  It  is 
advisable  to  make  your  reconcilement  in  bound  folio  for  handy  refer- 
ence. See  to  it  by  a  careful  check  that  all  of  your  correspondents  report 
upon  accounts  within  reasonable  time — a  failure  to  do  so  implies  a  badly 
m.anaged  bank,  an  overworked  force,  or  crookedness. 


INDIVIDUAL  BOOKKEEPER'S  DEPARTMENT. 

What  are  the  most  important  features  in  the  work  of  this  depart- 
ment? 

Ans. — I.  To  understand  the  difference  between  Debit  and  Credit. 
2.  That  the  bookkeeper  so  train  mind  and  eye  that  he  will  instantly  pre- 
vent or  detect  an  overdraft. 


What  should  be  done  with  all  cancelled  checks  or  vouchers? 
Ans. — They  should  be  systematically  preserved,  if  the  bank  book 
cannot  be  procured  for  settlement. 


How  often  should  paid  checks  be  sorted  and  bank  books  settled, 
and  by  whom? 

Ans. — Sorting  should  be  done  daily,  and  custom  has  made  this  part 
of  the  work  of  the  bookkeeper  in  many  banks,  but  others  are  delegating 
the  sorting  of  checks  and  settling  of  bank  books  to  an  additional  clerk, 
whose  instructions  are  not  to  confer  with  the  bookkeeper  as  to  time, 
manner  of  settlement  or  reconcilement  of  differences,  and  with  this  clerk 
the  custody  of  the  cancelled  checks  is  lodged. 


How  would  you  arrive  at  the  average  balance  of  a  depositor? 

Ans. — By  taking  the  sum  of  the  daily  balances  (morning  exchanges 
deducted)  for  a  given  number  of  days  and  dividing  by  the  same  number 
of  days.  With  the  modern  ledger  of  twelve  days  running  across  the 
foHo  and  twenty-seven  sections  to  the  ledger,  this  is  made  easy.  Balances 
should  be  averaged  for  each  section  and  carried  into  an  Average  Bal- 
ance Record,  ruled  in  horizontal  columns,  a  glance  over  which  would 
reveal  the  average  balance  kept  by  a  depositor  for  years  back. 

41 


If  by  inadvertence  an  account  becomes  overdrawn,  what  should  be 
done? 

Ans. — ^The  overdraft  should  at  once  be  reported  to  an  official  of  the 
bank  and  the  depositor  notified.  Let  the  bookkeeper  be  sure  though, 
that  the  account  is  overdrawn.  If  not  made  good  within  a  reasonable 
time  the  officers  should  be  kept  advised.  In  this  connection,  let  it  be  a 
rule  that  the  bookkeeper  keep  an  up-to-date  record  of  the  address  of 
every  account  in  his  ledger. 


When  an  account  is  closed  by  check,  what  should  be  done? 

Ans. — The  name  of  the  account  closed  should  be  handed,  upon  a 
slip,  to  the  proper  officer  immediately.  The  closing  of  an  account  will 
often  have  a  quick  and  important  significance  to  an  officer  of  the  bank, 
which,  to  an  under  clerk,  will  have  but  trifling  importance.  This  is  ai 
rule  which  should  not  be  permitted  to  lapse. 


In  a  bank  with  large  lines  of  active  accounts,  is  an  account  with, 
say,  an  average  balance  of  $ioo  profitable? 

Ans, — It  is  not,  and  where  there  are  many  of  this  character,  they 
serve  as  a  clog  upon  the  machine.  The  annoyance  and  burden  from  ac- 
counts of  this  size  have  made  it  necessary  in  some  large  institutions  to 
have  an  annual  house-cleaning  time  for  the  Individual  Ledger;  others 
have  adopted  the  Chicago  plan  of  charging  the  depositor,  say,  $12  per 
year.  The  smaller  accounts  not  only  crowd  the  ledger,  but  often  crowd 
the  lines  at  the  paying  and  receiving  desks  as  well.  Any  weeding  out 
process,  however,  will  need  to  be  done  with  care,  as  small  accounts  are 
at  times  feeders  to  better  ones. 


CORRESPONDING  AND  MAILING  DEPARTMENT. 

Why  should  this  department  have  an  accurate  knowledge  of  geog- 
raphy, and  particularly  of  the  territory  within  a  radius  of  500  miles? 

Ans. — This  is  indispensable  to  a  quick  and  proper  distribution  of  the 
many  items  sent  out  through  this  department.  Both  exchange  and 
time,  which  are  money,  can  be  saved  by  proper  discrimination  in  this 
respect.  Nine  days'  time  lost  in  securing  returns  for  an  item,  interest 
at  5  per  cent,  is  one-eighth  of  one  per  cent. 

Is  it  advisable  for  those  connected  with  this  department  to  have  the 
exact  names  of  the  officers  of  the  banks  with  which  they  correspond  at 
tongue's  end? 

Ans. — It  is. 


Are  there  other  reasons  why  collections  should  not  be  sent  by  a  cir- 
cuitous route,  causing  delay  in  presentation? 

Ans. — The  indorser  upon  an  ordinary  check  is  released  from  liabil- 
ity thereon  where  the  bank  forwarding  could  have  presented  the  check 
for  payment  within  twenty-four  hours,  but  sent  the  same  by  a  route  con- 

42 


suming  five  days,  and  when  presented,  payment  was  refused.     (See 
Comptroller's  Compilation  of  Decisions,  page  56.) 

What  letters,  after  copying,  need  to  be  given  extra  care  in  mailing? 

Ans. — All  ''confidential"  or  ''personal"  letters.  The  wrong  envel- 
ope used  just  here  has  caused  serious  embarrassment  to  more  than  one 
writer.  AH  such  letters  should  be  indexed  in  copying  book,  and  these 
books  carefully  labeled  and  kept  at  a  moment's  call. 

What  is  required  of  this  department  in  the  handling  of  "Notices  of 
Protest"? 

Ans. — Notices  to  be  served  upon  local  customers  should  be  handed 
to  the  messengers  before  their  route  for  the  day  is  made  up,  and  served 
without  fail  the  same  day.  Notices  which  go  by  mail  should  be  for- 
warded promptly  without  the  delay  of  a  day.  Clerks  are  often  inclined 
to  think  that  these  little  printed  forms  are  not  urgent,  and  grow  careless 
in  handling.  This  is  a  mistake,  as  due  diligence  must  be  given  in  serv- 
ing notice  upon  an  indorser  to  hold  him. 


What  is  one  of  the  most  important  features  of  the  work  of  this  de- 
partment in  closing  the  outgoing  mail  for  the  day? 

Ans. — That  the  right  enclosures  are  placed  in  the  right  envelopes. 
Errors  of  this  kind  are  not  infrequent,  are  not  only  annoying,  but  liable 
to  cause  embarrassment  and  loss  to  the  bank. 


Why  should  this  department  promptly  know  whether  items  sent 
through  the  mails  have  reached  the  point  of  destination? 

Ans. — In  order  that  if  miscarried,  payment  may  be  quickly  stopped 
and  duplicate  secured.  To  this  end,  a  watchful  check  should  be  kept 
upon  the  acknowledgment  of  all  letters  containing  enclosures,  and  ? 
failure  to  promptly  acknowledge  should  be  "looked"  to  at  once. 


43 


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The 
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A  SERIES    OF   FIVE    MAGNIFICENT  VOLUMES 
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The  Anatomy  of  a  Railroad  Report. 

THESE  books  may  be  justly  described  as  '*the  master- 
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':■  :a  -y.  :s'^:ma-:M^s»m^m 


Americafl  Institute  of  Bank  Clerks: 


J.  B,  FINLEY,  Prcs't     GEO.  F.  ORBE,  Vicc-Pres't      JOHN  F.  THOMPSON,  Treas.     GEO.  E.  ALLEN,  Sec'yl 


Board  of  Trustees 


|.  B.  FINLEY,  Pittsburg,  Pa.,  President  Fifth  National  Bank  ' 

GEORGE  F.  ORDE,  Chicago,  IlL,  Cashier  Northern  Trust  Co.  Bank  ; 

CLAY  HERRICK,  Cleveland,  Ohio,  Asst.  Treasurer  City  Trust  Co.  j 

ROBT.  J.  LOWRY,  Atlanta,  Ga.,  President  Lowry  National   Bank  I 

HARVEY  J.  HOLLISTER,  Grand  Rapids,  Mich.,  Vice-PreStdent  Old  National  Bank  | 

WALKER  HILL,  St.  Louis,  Mo.,  Preiident  American  Exchange  Bank  '\ 

JOHN  F.  THOMPSON,  New  York,  N.  Y.,  Vice-President  Bankers*  Trust  Co.  | 

JOSEPH  CHAPMAN,  Jr.,  Minneapolis,  Minn.,  Cashier  Northwestern  Nat.  BankI 

C,  B.  MILLS,  Clinton,  Iowa,  Cashier  Peoples*  Trust  and  Savings  Bank  1 

i 

HHE  Institute  was  founded  in  1900  by  the  American  Bankers*! 
Association.  Its  object  is  to  furnish  banking  education  toil 
bankers,    bank    employees,    and    others   interested    in    banking^ 

STANDARD  EXAMINATIONS     I 

FOR  j 

Certificates  of  Proficiency  I 

may  be  considered  the  crowning  point  of  the  work  of  the  Institute.  The  Standard  Examinations  arc  J 
held  annually  at  convenient  points  throughout  the  country.  The  subjects  in  which  applicants  arc  ex-] 
amined  are  Practical  Banking,  Commercial  Law  and  Political  Economy.  The  examiners  are  men  of  thej^ 
highest  reputation  and  ability  from  the  principal  universities  of  the  country.  The  work  of  the  Institute,  ^ 
to  furnish  the  best  banking  education  to  every  one  interested  and  to  thoroughl)  equip  those  desiring  to| 
pass  the  Standard  Examinations,  is  conducted  albng  three  distinct  but  interdependent  lines.  Without  J 
regard  to  relative  importance,  for  each  serves  to  supplement  the  others,  they  may  be  described  in  the  1 
following  order  : —  3 

Re&din^  Courses — To  aid  students  in  the  work  of  preparation  for  the  Standard  Examinations,^^ 
the  Institute  has  arranged  Reading  Courses  in  Practical  Banking,  Commercial  Law  and  Political  Econ-  | 
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Ch».p<ers  of  the  Institute*  for  those  m  communities  of  sufficient  size  to  afford  co-operative  educational  '^ 
effort.  Chapter  work  consists  of  debates,  discussions  and  competitions  in  bank  routine,  study  of  the  ex-  I 
amination  subjects,  by  the  members,  and  lectures  by  specialists,  all  under  the  supervision  of  the  Institute,  i 

TKe  Bulletin  o!  the  Institute,  the  official  medium  of  inter-communication  between  the  Institute  and  its  i 
members  of  all  classes.  It  publishes  articles  of  educational  value  on  ban  ing  and  financial  subjects  hyi 
eminent  authorities,  and  practical  articles  on  banking  methods,  by  the  chapter  members  and  students,  i 

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American  Institute  of  Be^nk  Clerks,  25  Pine  St.»  New  Yorki 


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